Yes Bank has enough liquidity to meet all its obligations, the private lender said on June 24, a day after two ratings agencies downgraded its Basel-II compliant Upper Tier II Bonds to default, citing inadequate capital levels as per the Reserve Bank of India’s norms.
ICRA downgraded the rating on Rs 1,344 crore worth Upper Tier II bonds to ICRA D from BB rating. The downgrade factors in the specific features of the instrument wherein the debt-servicing is linked to the bank meeting the regulatory norms on capitalisation - CRAR of 9 percent, the rating agency said.
CARE, too, announced a similar rating action.
Yes Bank reiterated it had enough liquidity and its inability to pay interest on Upper Tier II Bonds was due to technical reasons.
“The bank in its FY 2019-20 financial results, announced on May 6, 2020, had declared that it did not meet the regulatory capital ratio requirement as on March 31, 2020 and therefore its inability to service the coupon due on June 29, 2020, is solely a function of the Bank being below the regulatory capital threshold as on March 31, 2020,” Yes Bank said.
The bank would like to stress that the coupon on these bonds (Basel II, Upper Tier II Bonds) is cumulative in nature and any unpaid sum will become payable once the bank meets minimum regulatory capital ratio subject to the required regulatory approvals, Yes Bank said.
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