Moody's to review YES Bank for downgrade over exposure to weaker NBFCs

As of March 2019, Yes Bank's exposure to Indian housing finance companies and NBFCs was 6.4% of its total exposure

Global rating agency Moody’s on Tuesday placed YES Bank Limited's foreign currency issuer rating of Ba1 under review for downgrade as liquidity pressures on finance companies may negatively impact credit profile of Indian private lender.

YES Bank has sizeable exposure to weaker companies in the financial sector (non-banking finance companies and housing finance firms).

As of March 2019, YES Bank's exposure to Indian housing finance companies (HFC) and non-bank finance companies (NBFC) represented 6.4 per cent of its total exposure, Moody’s said in a statement.

In addition, the lender had a seven per cent direct exposure to commercial and residential real estate as of the same date, which is also under pressure, because liquidity conditions in this space have worsened, just like with the HFCs and NBFCs.

In April 2019, the bank had classified about Rs 10,000 crore of its exposures, representing 4.1 per cent of its total loans under the watchlist, as potential non-performing loans over the next 12 months.

Moody's has also placed the bank's long-term foreign and local currency bank deposit ratings of Ba1, foreign currency senior unsecured MTN programme rating of (P)Ba1 under review for downgrade.

In addition, Moody's has affirmed the bank's short-term foreign and local currency bank deposit rating.