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Mumbai: Moody's Investors Service on Friday downgraded YES Bank’s long-term foreign currency issuer rating to ‘Caa3’ from ‘B2’, and said the ratings remain under review, with the direction uncertain.
The ratings agency also downgraded the bank's long-term foreign and local currency bank deposit ratings to ‘Caa1’ from ‘B2’, and its foreign currency senior unsecured MTN program rating to (P) ‘Caa3’ from (P) ‘B2’.
It said these ratings remain under review, with the direction uncertain.
In addition, Moody's downgraded the bank's long-term domestic and foreign currency Counterparty Risk Rating (CRR) and long-term Counterparty Risk Assessment (CR Assessment) to Caa1 from B1 and Caa1(cr) from B1(cr) respectively.
These ratings too, remain under review, with the direction uncertain.
It also downgraded Yes Bank's Baseline Credit Assessment (BCA) and adjusted BCA to 'Ca' from 'Caa2'.
“The downgrade of Yes Bank's issuer and senior unsecured MTN program ratings to Caa3 from B2 and (P)Caa3 from (P)B2 respectively is a result of an event of default triggered by the Reserve Bank of India's (RBI) 30-day moratorium, which prevents Yes Bank from making a full and timely payment to its senior creditors,” Moody’s said in a release.
Despite the event of default, the Caa3 rating takes into account Moody's expectation that although recovery rates for the banks' senior creditors may be high given the close involvement of the Indian authorities and stated intention to resolve the bank quickly, the ultimate timing and form of eventual resolution remains uncertain, the ratings agency said.
“Actions by the authorities to date have not reduced the probability of default as evidenced by the moratorium announcement, and highlights the continued uncertainty around private sector bank resolutions in India and the recovery prospects for senior creditors,” Moody’s said in a note.
