Yes Bank shares decline 5%, stocks fall 24% in 8 days

Reports say that it is likely that Yes Bank is going to put away the offer that made up more than half of its planned $2 billion capital raising and is instead talking to institutional investors about making up for the steep downfall.

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Shares of Yes Bank dipped 5 per cent to hit a six-week low of Rs 53.40 on the BSE ahead of the board meeting slated for later today to finalize and approve the details of the preferential allotment.

Yes Bank stocks have been trading at quite a low level since late October. Stocks have fallen 24 percent in the past eight trading days, as compared to a two percent decrease in the Standard and Poor’s (S&P) BSE Sensex. 

The stocks hit an “intra-day” high on November 29, that being Rs 74, saying that the size of its equity capital offer has been increased to 2 billion dollars from the earlier figure 1.2 billion dollars on “strong interest” shown by NRI investors, including a 1.2-billion-dollar offer by SPGP Holdings and Erwin Singh Braich, and 500 million dollars by Citax Holdings and Citax Investment Group. 

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A Bloomberg report says the contradictory, that Yes Bank is probably going to reject the offers that made up more than half of the planned 2 billion dollar capital raising and is in talks with institutional investors instead, to make up for the downfall.

Yes Bank’s long-term foreign currency rating has been downgraded by Moody’s, a global rating agency, from “Ba3” to “B2” with a negative outlook. The firm also noted that there are significant risks to execute the offers received by the bank that centre around the timing, price and regulatory approvals. 

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The ratings of the bank were lowered because Moody's expected that the bank's supply of low loss-absorbing buffers against potential stressed assets will add pressure to its liquidity and funding, creating an additional danger to its Baseline Credit Assessment (BCA) or standalone credit profile.

Moody’s may change the overall rating of Yes Bank to stable if the bank reports a material capital raise and assures loss-absorbing buffers. Given the negative picture, Moody's is unlikely to upgrade the bank's ratings over the next 12 to 18 months. 

Yes Bank was trading 2 per cent lower at Rs 55 on the BSE, having erased partial intra-day losses, at 10:51 am on December 10. Comparatively, the S&P BSE Sensex was down 0.21 per cent at 40,402 points. A total of 100 million equity shares have exchanged hands on the NSE and BSE so far.