Yes Bank shares fell as much as 4.3% to ₹98.75 on BSE today, extending their bear run after credit agency Moody's put the company under review for a downgrade. This is the first time in five years that Yes Bank share prices are down to double digits. Analysts have been downgrading Yes Bank’s stock on concerns over further deterioration in asset quality. The proportion of "sell" calls on the stock has reached the highest in nearly a decade, Bloomberg reported on 17 June.
UBS Group AG recently cut Yes Bank’s price target on concerns over its relatively high exposure to lower-rated companies. Credit Suisse Group AG said in April that the bank was among lenders most-exposed to a few large companies with stressed debt.
Moody’s Investors Service this month warned of a potential downgrade on Yes Bank’s credit rating, citing its “sizeable exposure" to weaker companies in the shadow banking sector.
Moody’s said the review takes into account the ongoing liquidity pressures on Indian finance companies, which may negatively impact the credit profile of Yes Bank, given its sizeable exposure to weak companies in the sector.
In April, the bank had classified about ₹10,000 crore of its exposures, representing 4.1% of its total loans, under its stressed assets watch list. The rating agency says this could translate into non-performing loans over the next 12 months.
Yes Bank plans to raise $1.2 billion over 18 months to bolster its capital buffer through a mix of public and private share sales, Bloomberg reported citing chief executive officer Ravneet Gill.
Yes Bank shares later recovered to close 11% higher at ₹114.55 (With Bloomberg Inputs)