Global rating agency Moody's Investors Service on August 3 said it has upgraded Yes Bank’s ratings following the recent equity capital raising.
The rating agency upgraded the long-term foreign currency issuer rating to B3 from Caa1. Moody's has also upgraded the bank's long-term foreign and local currency bank deposit ratings to B3 from Caa1, and its foreign currency senior unsecured MTN programme rating to (P)B3 from (P)Caa1.
The upgrade is on the basis of Yes Bank's successful equity capital raise of Rs 15,000 crore which has bolstered its solvency, the agency said.
“The successful equity raising showcases Yes Bank's regained access to external market funds, which is a result of its improving financial strength and will support depositor confidence,” Moody’s said.
Following the capital increase, the bank's Common Equity Tier 1 ratio will more than double to 13.4 percent from 6.6 percent based on the bank's capital position at the end of June 2020, bringing its capitalisation largely in line with its private sector peers, Moody’s said.
“The significantly improved solvency ratio strengthens the bank's resilience to potential asset quality risks resulting from the ongoing impact of the economic slowdown and coronavirus-related disruptions on India's economy,” said the agency.
Yes Bank's funding and liquidity have moderately improved in the second quarter of 2020, although they are still weaker than a year ago. Deposits, including current, savings and term deposits, increased 11 percent during March and June 2020, but remain 48 percent less than the same period last year, Moody’ noted.
Yes Bank was bailed out in March this year by a bank consortium led by State Bank of India following a financial failure on account of alleged fraud committed by the previous management.
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