Mumbai– Care Ratings on Tuesday placed Yes Bank’s bonds worth Rs 21,000 crore on “credit watch with negative implications” citing the continued delay in raising core equity capital.
The agency said that in absence of the equity capital raise, the bank’s core capital buffers continue to be at low levels and provide a lower cushion to absorb any losses on account of higher provisioning requirement due to weakening of asset quality.
The bank has been in the process of raising a significant amount of equity capital and had received a binding offer from an investor of $1.2 billion, valid till November 30, 2019 which was further extended to December 31, 2019, subject to regulatory and other approvals.
“In November 2019, YBL had disclosed that it increased the quantum of proposed equity capital to around $2.0 billion (Rs 14,000 crore). However, the bank has been unable to materialise any capital raise till date,” the agency said.
The ratings have been put on ‘Credit Watch with Negative Implications’ on account of continued uncertainty related to quantum and timeline of raising equity capital, it added.
Besides, the bank has delayed the publishing of the financial results for the quarter/ nine months ended December 31, 2019 which is beyond the 45 day period from the end of the relevant quarter as stipulated listed norms.
CARE has noted that the bank has received non-binding expressions of interest (EOI) from several investors including J.C. Flowers & Co. LLC, Tilden Park Capital Management LP, OHA (UK) LLP and Silver Point Capital and is working with its financial advisors to complete the capital raise.
CARE would resolve the credit watch once clarity emerges on the quantum and timeline capital raise vis-a-vis incremental provisioning requirement towards any deterioration in asset quality, it said.
The bank reported Core Equity Tier I (CET I) ratio of 8.7 per cent as on September 30, 2019 as compared to minimum regulatory requirement of 7.375 per cent as on March 31, 2019 and 8.00 per cent as on March 31, 2020. (IANS)
