Rating Agencies Upgrade Yes Bank Bonds On Improved Liquidity, Shares Rise Nearly 5%

Yes Bank shares rose close to 5 per cent in Friday's morning trade after two rating agencies - India Ratings and Crisil upgraded the private lender's bonds. The Yes Bank shares hit an intra-day high of Rs 15.41, up 4.75 per cent from the previous closing in early trade. At 2 pm, the stock had pared most of its gains but was still trading over 1.50 per cent higher.

Late on Thursday, in a regulatory filing, Yes Bank informed the exchanges about the Crisil upgrade. Crisil upgraded its rating on Rs 20,000 crore certificates of deposit of Yes Bank to 'A2-plus' from 'A2' besides reaffirmed its 'BBB/Stable' rating on the bank's tier two bonds under Basel III and infrastructure bonds.

"The upgrade in short term rating reflects an improvement in funding and liquidity profile of the bank with a gradual increase in its deposit base as well as sizeable capital raised recently," it said.

Yes Bank's total deposits increased to Rs 1.17 lakh crore as on June 30 from Rs 1.05 lakh crore as on March 31, Crisil said, adding that the bank has raised Rs 15,000 crore through a follow-on public offer in July, significantly improving its capital position.

Crisil also mentioned that State Bank of India's (SBI) stake holding in Yes bank also impacted the upgrade. Earlier this year, the Reserve Bank of India (RBI) had taken control of Yes Bank, after the bad-debt laden lender had failed to raise the capital it needed to stay above mandated regulatory requirements. Since then SBI had stepped in to acquire a stake in the private lender and to keep it afloat.

Meanwhile, India Ratings upgraded Yes Bank's long-term issuer rating to 'BBB' from 'BB-' while resolving the rating watch evolving. The outlook is stable. The rating agency said the multi-notch upgrade and the resolution of rating watch evolving reflect a significant improvement in Yes Bank's profile and operating metrics post its reconstruction in March.

India Ratings added that it expects the bank to continue improving its operating metrics and liability profile over the next few quarters as it continues making provisions for COVID-19 related impact on its portfolio.