Yes Bk's cap-raise holds key: Moody's - Times of India
18-Jan-2020 03:03:45 AM
Mumbai: Moody's has placed Yes Bank's ratings under review with a remark that further direction was uncertain. At the same time, the ratings agency has downgraded the bank's baseline credit assessment to Caa2 from B3. The placing of Yes Bank's deposit rating of B2 under review reflects Moody's expectation that the lender's standalone viability is getting increasingly challenged by its slowness in raising new capital.
The ratings agency said that the potential credit risk to the bank's creditors is uncertain because there are several diverse scenarios that could affect it in either positive or negative directions. Yes Bank is in discussions with a number of investors to raise new equity capital, which would be credit-positive if executed successfully. If the bank successfully recapitalises, repairs and cleans its balance sheet, its ratings could stabilise or be upgraded.
According to Moody's, if a private sector solution is unsuccessful, and a regulatory led resolution is implemented, Moody's expects that Indian authorities will strive to maintain systemic stability and avoid losses to depositors and senior creditors. Any concrete measures from Indian authorities to resolve the bank without losses to the depositors and senior creditors could also lead to a stabilisation or an upward movement in the bank's ratings."Because the viability of the bank absent a large capital injection is in question, Moody's has downgraded the bank's standalone credit profile or its BCA to Caa2 from B3, " said Moody's vice-president and senior credit officer Alka Anbarasu.
A scenario where neither a private sector recapitalisation nor balance sheet repair are forthcoming would be credit-negative, and could lead to a downward movement of the bank's ratings.