Yes Bank rating placed on watch

Rating agency Moody’s Investors Service has placed Yes Bank’s various debt instruments under review for downgrade.

“The review for downgrade takes into account Moody’s expectation that the ongoing liquidity pressures on Indian finance companies will negatively impact the credit profile of Yes Bank, given the bank’s sizeable exposure to weaker companies in the sector,” Moody’s said.

According to Moody’s, at the end of March 2019, Yes Bank’s exposure to Indian housing finance companies (HFCs) and non-bank finance companies (NBFCs) represented 6.4% of its total exposure. In addition, Yes Bank had a 7% direct exposure to the commercial and residential real estate sector as of the same date. This was also under pressure asliquidity conditions had worsened for the real estate sector, just as in the case of the HFCs and NBFCs, it said. The rating agency expects significant pressure on the bank’s asset quality and therefore profitability and capital position.