Moody's may lower Yes Bank

Moody's Investors Service said it placed Yes Bank Ltd.'s foreign-currency issuer rating of Ba1 under review for downgrade.

Moody's also said it placed the bank's long-term foreign- and local-currency bank deposit ratings of Ba1, foreign-currency senior unsecured medium-term notes program rating of provisional Ba1 and baseline credit assessment and adjusted baseline credit assessment of Ba2 under review for downgrade.

The agency also said it placed the bank's counterparty risk assessment of Baa3(cr)/P-3(cr) and domestic- and foreign-currency counterparty risk rating of Baa3/P-3 under review for downgrade.

Moody's also said it affirmed the bank's short-term foreign- and local-currency bank deposit rating of not-prime.

The review for downgrade takes into account an expectation that the ongoing liquidity pressures on Indian finance companies will negatively impact the credit profile of Yes Bank, given the bank's sizable exposure to weaker companies in the sector, the agency said.

The bank's weak performance in fiscal 2019 led to its capital falling to 8.4% from 9.7% in fiscal year 2018, Moody's added.

The bank's board has approved an up to $1 billion equity capital raise, the agency said.

If Yes Bank cannot raise the capital, its loss absorbing capacity and therefore financial profile will be under pressure, the agency said.

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