CARE assigns 'AA-' to Yes Bank Upper Tier II bonds
CARE has assigned ‘CARE AA-’ rating to the proposed Upper Tier II bonds issue of Yes Bank aggregating to Rs 200 crore.
By ET Bureau |
MUMBAI: CARE has assigned ‘CARE AA-’ rating to the proposed Upper Tier II bonds issue of Yes Bank aggregating to Rs 200 crore.
The rating takes into account steady improvement in the bank’s profitability parameters over past few years, its demonstrated ability to maintain asset quality across business cycle, its consistently robust capital adequacy parameters along with its ability to raise capital at regular intervals to support its business growth.
The rating also factors in the track record of Yes Bank’s promoters, experienced senior management team, its risk management systems and strong technology platform. The ratings are however, constrained due to relatively limited track record of operations of the bank. Yes Bank’s low proportion of low cost Current Account-Saving Account (CASA) deposits is also a rating constraint. In addition, Yes Bank’s ability to raise low-cost resources, maintain asset quality of its fast-growing advances portfolio, sustain the high non-fund-based income and manage its asset-liability position, are the key rating sensitivities.
CARE has rated the Upper Tier II bonds one notch lower than the Rs 750-crore Lower Tier II bonds issue, which are rated ‘CARE AA’, in view of the additional risk arising due to existence of lock-in-clause in these instruments.
Any delay in payment of interest/principal (as the case may be) following the invocation of the lock-in-clause would constitute as an event of default, as per CARE’s definition of default and as such these instruments may exhibit somewhat sharper migration of rating, as compared to conventional subordinated debt instruments.
On the Bombay Stock Exchange, Yes Bank shares were up 0.55 per cent at Rs 328.
The rating takes into account steady improvement in the bank’s profitability parameters over past few years, its demonstrated ability to maintain asset quality across business cycle, its consistently robust capital adequacy parameters along with its ability to raise capital at regular intervals to support its business growth.
The rating also factors in the track record of Yes Bank’s promoters, experienced senior management team, its risk management systems and strong technology platform. The ratings are however, constrained due to relatively limited track record of operations of the bank. Yes Bank’s low proportion of low cost Current Account-Saving Account (CASA) deposits is also a rating constraint. In addition, Yes Bank’s ability to raise low-cost resources, maintain asset quality of its fast-growing advances portfolio, sustain the high non-fund-based income and manage its asset-liability position, are the key rating sensitivities.
CARE has rated the Upper Tier II bonds one notch lower than the Rs 750-crore Lower Tier II bonds issue, which are rated ‘CARE AA’, in view of the additional risk arising due to existence of lock-in-clause in these instruments.
Any delay in payment of interest/principal (as the case may be) following the invocation of the lock-in-clause would constitute as an event of default, as per CARE’s definition of default and as such these instruments may exhibit somewhat sharper migration of rating, as compared to conventional subordinated debt instruments.
On the Bombay Stock Exchange, Yes Bank shares were up 0.55 per cent at Rs 328.
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