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Moody's upgrades Yes Bank's ratings on fund raising
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SME Times News Bureau | 04 Aug, 2020
Credit ratings agency Moody's Investors Service has upgraded Yes Bank's
long-term foreign currency issuer rating to 'B3' from 'Caa1' after the
bank recently raised Rs 15,000 crore through a further public offering
(FPO).
It has also changed the outlook for Yes bank to stable from positive.
The rating agency has attributed the upgrade to the improved solvency of the bank as a result of the capital increase.
"Moody's
has also upgraded the bank's long-term foreign and local currency bank
deposit ratings to B3 from Caa1, and its foreign currency senior
unsecured MTN program rating to (P)B3 from (P)Caa1," said a statement by
Moody's.
In addition, the rating agency has upgraded the bank's
long-term local and foreign currency Counterparty Risk Ratings (CRR) and
long-term Counterparty Risk (CR) Assessment to B3 from Caa1 and B3(cr)
from Caa1(cr) respectively.
"Yes Bank's successful equity capital
raise of Rs 150 billion (about $2 billion) has bolstered its solvency
and is the main driver of the ratings upgrade. The successful equity
raising showcases Yes Bank's regained access to external market funds,
which is a result of its improving financial strength and will support
depositor confidence," it said.
It noted that following the
capital increase, the bank's Common Equity Tier 1 ratio will more than
double to 13.4 per cent from 6.6 per cent based on the bank's capital
position at the end of June 2020, bringing its capitalization largely in
line with its private sector peers.
The significantly improved
solvency ratio strengthens the bank's resilience to potential asset
quality risks resulting from the ongoing impact of the economic slowdown
and coronavirus-related disruptions on India's economy.
Further,
the restructured bank's funding and liquidity have moderately improved
in the second quarter of 2020, although they are still weaker than a
year ago.
Deposits, including current, savings and term deposits,
increased 11 per cent during March and June 2020, but remained 48 per
cent less than the same period last year, it said, adding that the
deposit growth was largely driven by current account, corporate term
deposits and certificate of deposits.
However, despite the
improvement in its deposits base, Moody's expects that it will be
challenging for Yes Bank to restore its low-cost current account savings
account (CASA) deposits to pre-March 2020 rescue levels. Even prior to
its rescue, Yes Bank's low CASA ratio was a weakness relative to other
rated Indian private sector banks, it said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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