INSUBCONTINENT EXCLUSIVE:
By Denise WeeOne of India’s largest private sector lenders slumped by a record in the bond market on Wednesday, as concerns mount over the
health of the nation’s finance sector amid a shadow banking crisis.
Dollar bonds of Yes Bank Ltd., which has sizable exposure to the
cash-strapped shadow lenders, slumped a record 5.5 cents to 80.9 cents on the dollar on Wednesday, the lowest since the bonds were sold in
2018.
The bank is at the epicenter of rising stress in India’s credit markets, where shock defaults last year by a major infrastructure
lender have led to broader strains at other shadow banks
Yes Bank’s shares collapsed about 23% on Tuesday to the lowest since 2009, amid concerns that a cleanup in corporate debt could drag on
Debt woes among India’s non-bank lenders including Indiabulls Housing Finance Ltd
have also prompted jitters for the sector.
“The stock and bonds both are reflecting investor concerns on asset quality, where slower
resolutions and rising stress could continue to pose pressure,” said Diksha Gera, a Bloomberg Intelligence analyst.
A report that Yes Bank
shares pledged by its co-founder Rana Kapoor, have been sold, has also weighed on the bank’s shares
The India stock market is closed today for a holiday.
Kapoor stepped down as chief executive officer earlier this year after the Reserve
Bank of India refused to grant him another three-year term amid a controversy over bad-debt accounting.
