“The downgrade of Yes Bank's ratings takes into account of the lower than expected amount of capital raised by the bank recently; and the risk that the substantial decline in the bank's share price will challenge its ability to raise sufficient capital to maintain the rating at its previous level”, Moody’s said in rating rational.
Furthermore, Moody's expects the bulk of Yes Bank's operating profits to get consumed by loan loss provisions over the next 12-18 months, and thus not support internal capital generation.
The negative outlook primarily reflects the risk of further deterioration in the bank's solvency, funding or liquidity, as the bank continues to work through the asset quality issues and rebuilds its loss absorbing buffers, it said.
Meanwhile, YES Bank, after market hours on Tuesday, said the bank's board of directors is scheduled to meet on Friday, August 30, 2019, to consider fund raising plan. On August 14, 2019, Yes Bank raised Rs 1,930 crore in new capital via a qualified institutional placement (QIP).
At 02:33 pm, YES Bank was trading 9 per cent lower at Rs 58 on the BSE, as compared to 0.92 per cent decline in the S&P BSE Sensex. The counter saw huge trading volumes with a combined 200 million shares changing hands on the NSE and BSE so far.