Due to uncertainty over the private lender's fund raising plans, foreign brokerage Moody's Investors has put the long term foreign currency issuer rating 'B2' under review. At the same time, foreign and local currency bank deposit ratings 'B2' and its (P) B2 foreign currency senior unsecured MTN programme are under review with the "direction uncertain".
Meanwhile, the bank;s baseline credit assessment has been downgraded as well as adjusted.
The agency said that the "standalone viability of Yes Bank is getting increasingly challenged by its slowness in raising new capital"."The potential credit risk to the bank's senior creditors is uncertain, because there are a number of diverse scenarios that could affect the rating in either positive or negative directions."
"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," Moodys said.
It is believed that Indian authorities in a case when regulatory-led resolution has been put in place there will be difficulty in maintaining systemic stability as well as avoiding losses to senior creditors and depositors.