Ind-Ra downgrades Yes Bank’s long term issuer rating to ‘BB-‘

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Biznextindia : India Ratings (Ind-Ra)  has downgraded the credit rating of crisis ridden Yes Bank to ‘IND BB-’ from ‘IND A-‘ while maintaining the Rating Watch Negative (RWN). The agency has taken the rating action after RBI kept Yes Bank under moratorium for a month.

“The rating action is based on the gazetted notification issued by the finance ministry (banking division) on 5 March 2020 where, through an order of moratorium, it has stayed the commencement or continuance of all actions and proceedings against Yes Bank till 3 April 2020. The bank cannot make a payment of above INR50,000 to any of its depositors till the duration of moratorium, with some exceptions. The agency also takes cognizance of the Reserve Bank of India (RBI) circular, dated 5 March 2020, titled ‘Yes Bank Ltd. Placed under Moratorium’ where its refers to the aforementioned orders and also mentions that a scheme could be drawn up before the end of moratorium for the bank’s reconstruction or amalgamation with the approval of central government. The RBI has appointed Mr. Prashant Kumar, ex-DMD and CFO of State Bank of India (‘IND AAA’/Stable) as the administrator for Yes Bank after the super-session of its board of directors” Ind-Ra said.

“The agency also refers to the draft reconstruction scheme for Yes Bank issued by the RBI today. The scheme incorporates State Bank of India’s plan to infuse substantial equity into Yes Bank to hold up to 49% shares in the latter. In addition, the plan, while suggesting for a full write-down /conversion of AT1 investments / bonds, also proposes that all other liabilities including deposits would be honoured. The Finance Minister today mentioned publicly that the depositor interest would be protected and the depositors would not be taking haircuts” it added.

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