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YES Bank's promoter firms prepay Rs 4 billion of loans to mutual funds

Interestingly, the day the rating was reaffirmed, the share price of YES Bank was down 50% in three months

Jash Kriplani  |  Mumbai 

YES Bank
YES Bank

The shares of on Monday fell as much as 7 per cent in intra-day trade amid concerns over the rating outlook of YES Bank’s promoter-issued non-convertible debentures (NCDs). However, these concerns were allayed to some extent, as sources said the bank’s promoter companies had prepaid Rs 4 billion of the outstanding loans to the two mutual fund (MF) houses holding the debentures.

The bank’s scrip also recouped its losses, closing 4 per cent lower on Monday. According to sources, Franklin MF and Reliance MF each received Rs 2 billion from the promoter companies.

ALSO READ: Yes Bank board to meet on December 13, look to replace board members

A recent report by Bloomberg had highlighted that Morgan Credits, one of the vehicles under which Chief Executive Officer and Managing Director Rana Kapoor’s family holds its bank’s stake, offered the family ‘a neat way to monetise its shares without pledging them’.

The said NCDs were reaffirmed ‘A minus’ by CARE Ratings on November 19. The rating note said that some “comfort can be drawn from the performance of YES Bank, which enjoys good creditworthiness.” The note added that substantial diminution in the value of investments held by Morgan Credits in is the key rating sensitivity.

Interestingly, the day the rating was reaffirmed, the share price of YES Bank was down 50 per cent in three months.

ALSO READ: Quit YES Bank board over no focus on finding next MD & CEO: Chandrashekhar

The shares of the private sector lender have been seeing a bout of selling since September, when the Reserve Bank of India cut short the proposed tenure extension of Kapoor, from three years to five months.

While Kapoor is set to step down as the chief of the bank on January 31, 2019, the process to appoint a successor is facing challenges, with multiple resignations on the bank’s board.

First Published: Mon, November 26 2018. 23:14 IST