Yes Bank shares rebound despite ratings downgrade, settle nearly 7 pc higher

Shares of Yes Bank on Thursday bounced back and closed up to 7 per cent higher after losing over 3 per cent during the day.

India Ratings and Icra downgraded the bank's ratings on uncertainty regarding the lender's fund raising plans.

The stock closed 6.74 per cent higher at Rs 49.90 on the BSE. Intra-day, it traded between a low of Rs 45 and a high of Rs 51.40 per unit.

On the NSE, the scrip rallied 6.52 per cent to Rs 49.80. During the day, it traded between Rs 44.95 and Rs 51.40.

The share price rebounded suddenly in late afternoon trading hours after trading in red for most of the session.

In early trade, the stock fell over 3 per cent after India Ratings and Research (Ind-Ra) downgraded the lender's long and short-term issuer ratings.

More than 30 crore shares were traded on the NSE during the day, while over 2 crore units exchanged hands on the BSE.

Ind-Ra backed the downgrade saying that the private sector lender failed to meet the expectations with respect to equity infusions.

In the absence of improvements on the capital side, the ability of the bank to manage its asset and liability maturities might be tested further.

"The downgrade reflects the inadequate progress as per Ind-Ra's expectations with respect to the quantum and pace of equity infusions, which is critical for providing sufficient cushion for the credit cost impact of the stressed asset pool," Ind-Ra said on Wednesday.

Rating agency Icra also downgraded Yes Bank's ratings for its bond and deposit programmes worth Rs 52,911 crore.

The agency considered the continued uncertainty of timing and quantum of capital raise of Yes Bank, it said.

It also noted that the bank's solvency profile remains weak as on September 30, 2019 apart from the stressed exposures in the investment book.

With the delay in fund raising and a likely increase in NPAs, the capital and solvency profile are expected to weaken further, Icra added.