YES Bank soars 96% in 2 days on Moody's ratings upgrade, positive outlook

The global rating agency Moody's has upgraded YES Bank's long-term foreign currency rating from "Caa3" to "Caa1" on bail-out package

Shares of YES Bank rallied 35 per cent to Rs 50 on the National Stock Exchange (NSE) on Tuesday in the early morning trade after the global rating agency Moody's upgraded YES Bank's long-term foreign currency rating from "Caa3" to "Caa1" on bail-out package involving fresh equity capital infusion with a positive outlook.

In the past two trading days, the stock of the private sector lender has soared 96 per cent from Rs 25.55 on Friday, after the Union Cabinet approved the reconstruction of the crisis-hit bank as per the scheme proposed by Reserve Bank of India (RBI).

At 09:57 am, YES Bank was trading 30 per cent higher at Rs 48.20, as compared to 1.45 per cent rise in the benchmark Nifty50 index. A combined 48.9 million shares changed hands on the counter on the NSE and BSE till the time of writing of this report.

With the past two day’s rally, the share price of YES Bank has zoomed 785 per cent from its all-time low of Rs 5.65 touched on March 6, 2020 in the intra-day trade.

“The upgrade of YES Bank's long-term issuer rating to Caa1 from Caa3, placing it at the same level as its long-term deposit ratings, takes into account the bailout of the bank's depositors and senior creditors under the YES Bank Reconstruction Scheme, as approved by the Indian Government (Baa2 negative) on 13 March 2020,” Moody's Investors Service said in a press release.

The rating action also takes into account the confirmation by the Indian authorities and YES Bank that the moratorium on its depositors and creditors will be lifted on March 18, 2020.

Given the new capital raised and the AT1 securities writedown, Moody's expects YES Bank's solvency to improve and that the recovery rates for the banks' depositors and senior creditors will be very high, supporting the current credit ratings, it added.