InvestorQ : What is the latest on the AT1 bonds issued by Yes Bank, which were entirely written off by the RBI to zero value?
NISHA Nayak made post

What is the latest on the AT1 bonds issued by Yes Bank, which were entirely written off by the RBI to zero value?

Answer
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4 months ago


Axis Trustee, which represents the bond holders of Yes Bank has alleged that Yes Bank officials and sales staff had misled retail investors and sold perpetual bonds, including to retired senior citizens. Axis has signed an affidavit to state that additional tier-1 or AT1 bonds were marketed as ‘Super Fixed Deposits’ by Yes Bank RMs. This is being corroborated by the emails written by the sales staff of Yes Bank to potential customers. The emails have, apparently, given an impression that AT1 bonds were not only risk-free but offered a higher return than regular FDs. Some RMs had also advised customers to break Yes Bank FDs and invest in AT1 bonds. Earlier, Axis Trustee had moved the Bombay High Court challenging Yes Bank’s decision to completely write down the AT1 bonds. This action has been contested by some large HNI investors too. It may be recollected that back in 2006 the RBI had allowed banks to issue AT1 bonds to augment their capital. Yes Bank had issued Rs.3000 crore and Rs.5415 crore worth of AT1 bonds in 2016 and 2018 respectively. Describing AT1 bonds as “super fixed deposit” was clear misrepresentation because AT1 bonds are riskier than regular bonds. In the case of AT1 bonds, the issuer can hold back interest payment under certain circumstances and there is a one sided call option for the issuer. Yes Bank had written down AT1 bonds to zero value, which is unprecedented in India.