Moody's also placed Yes Bank's long-term foreign currency issuer rating of B2, long-term foreign and local currency bank deposit ratings of B2, and its foreign currency senior unsecured MTN program rating of (P)B2, under review, with the direction uncertain.
Moody's Investors Service on January 16 downgraded YES Bank's Baseline Credit Assessment (BCA) and adjusted BCA to 'caa2' from 'b3' citing concerns on the standalone viability of the private lender as it struggles to raise capital.
Moody's also placed YES Bank's long-term foreign currency issuer rating of B2, long-term foreign and local currency bank deposit ratings of B2, and its foreign currency senior unsecured MTN program rating of (P)B2, under review, with the direction uncertain.
"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 and repairs and cleans its balance sheet, its ratings could stabilise or face upward pressure," Moody's said.
However, if a private sector solution is unsuccessful, and a regulatory led resolution is implemented, Moody's expects that the Indian authorities will strive to maintain systemic stability and avoid losses to depositors and senior creditors.
"A scenario where neither a private sector recapitalisation nor balance sheet repair are forthcoming would be credit negative, and could lead to a downward movements of the bank's ratings," the ratings agency said.
Yes Bank is in the process of raising capital since November last year, when it's Managing Director Ravneet Gill said that the bank had offers of $3 billion on the table for recapitalisation of the bank. However, the lender is yet to finalize the new investors for capital raising.Last week, the bank's board approved capital raising of upto Rs 10,000 crore by way of debt or equity instruments. While it rejected the $1.2 billion offer from Canadian industrialist Erwin Singh Braich, the board will consider $500 million offer from Citax Holdings.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.