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sara Kunju made post

What has been the reason for Moody’s downgrading Yes Bank after the stock has already corrected so much?

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8 months ago

Actually, Moody’s rating is a rating of the debt of Yes Bank and has little do with the stock price. Global rating agency, Moody’s, has downgraded the ratings of Yes Bank to negative outlook. Moody’s pointed out that stressed assets and other related issues would put pressure on the liquidity situation of the bank as also its fund capacity. The outlook is basically a reflection of further deterioration in its asset quality from current levels. The bank’s core capital is on the borderline at 8.7% and the future prospects of the bank could be endangered if the bank is not able to capitalize itself adequately on time. Yes Bank had made a statement that a number of lenders had expressed interest in taking a stake in the bank but not much progress has been made after that. Moody’s also sees significant risks to Yes Bank over the timing, pricing and the regulatory approvals required for this fund raising. It is not just Moody’s but even a number of brokers and global investors are now asking as to how Yes Bank will be able to raise the required funds to shore up its capital base.