YES Bank hits 6-week low ahead of board meet; stock falls 24% in eight days

Shares of YES Bank declined 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.

The stock of private sector lender was trading at its lowest level since October 29, 2019. In the past eight trading days, it has fallen 24 per cent, as compared to a 2 per cent decline in the S&P BSE Sensex.

The stock hit an intra-day high of Rs 74 on November 29, after YES Bank said it increased the size of its equity capital offer to $2 billion from the earlier guidance of $1.2 billion on "strong interest" shown by NRI investors, including a $1.2 billion offer by Erwin Singh Braich and SPGP Holdings, and $500 million by Citax Holdings and Citax Investment Group.

However, according to a Bloomberg report, YES Bank is likely to reject the offer that made up more than half of its planned $2 billion capital raising, and is talking to institutional investors about making up the shortfall.

Global firm Moody's notes that there are significant execution risks around the timing, price and regulatory approvals required for offered received by YES Bank. Subsequently, on December 5, the global rating agency downgraded the bank's long-term foreign currency rating from "Ba3" to "B2" with negative outlook.

Moody's downgraded the ratings on expectation that the bank's pool of potential stressed assets and low loss absorbing buffers against those assets - will add pressure to its funding and liquidity, creating additional risks to its standalone credit profile or Baseline Credit Assessment (BCA).

Given the negative outlook, Moody's is unlikely to upgrade the bank's ratings over the next 12-18 months. Nevertheless, Moody's could change the ratings outlook to stable, if YES Bank concludes a material capital raise that strengthens its loss-absorbing buffers, the rating agency noted.

At 10:51 am, YES Bank erased partial intra-day losses and was trading 2 per cent lower at Rs 55 on the BSE. In comparison, the S&P BSE Sensex was down 0.21 per cent at 40,402 points. A combined 100 million equity shares have changed hands on the counter on the NSE and BSE so far.