Icra downgrades Yes Bank's tier-II bonds to 'D' after RBI clampdown

Agency said downgrade has factored in specific features of the instrument where debt servicing is linked to meeting regulatory norms on capitalisation, i.e., CAR of 9%

Rating agency Icra has downgraded private sector Lender Yes Bank’s upper tier-II bonds from “BB” to “D” after Reserve Bank of India declined bank’s request to allow it pay coupon on this instrument.

RBI had restrained payment of interest (coupon) on the tier-II bonds as private lender’s capital adequacy ratio (CAR) was below regulatory requirements. Its CAR was of 8.50 per cent as on March 31, 2020.

Yes Bank had approached banking sector regulator with plea to allow payment of interest due as on June 29, 2020 for Upper Tier II Bonds. These unsecured non-convertible upper tier-II bonds carry coupon