YES Bank seeks redemption of tier-II bonds worth Rs 1,763 crore

Private sector lender YES Bank is planning for early redemption of tier II bonds of about Rs 1,763 crore. This is part of its plan to retire high-cost instruments before close of the current financial year (FY22).

The bank, in filing with the BSE, said the capital raising committee of the board approved the proposal for seeking a nod from investors for early redemption of tier II bonds. These instruments — lower and upper tier II bonds — are Basel II-compliant.

The lower tier II bonds just over Rs 1,059 crore are due for maturity between August and October 2022. The remaining — upper tier II bonds of about Rs 704 crore — are due for redemption between June and December 2027.  

Bank officials said these bonds are not part of the capital adequacy ratio since they are not Basel-III compliant. They carry a high coupon rate (nine per cent and above), which is a costly obligation to service. Hence, the bank decided to redeem them earlier than the maturity date.

Now, the bank has surplus liquidity with cost of funds below five per cent. The intent is to complete redemption before the close of Mach 2022, officials said.
 

Its capital adequacy ratio was 17.7 per cent with tier I of 11.6 per cent as of December 2021. The bank’s stock closed flat at Rs 13.92 per share on the BSE on Friday.