Earlier this month, YES Bank
had raised Rs 1,930 crore through the Qualified Institution Placement (QIP) route. It had allotted 231 million equity shares to eligible qualified institutional buyers (QIBs) at Rs 83.55 per equity share.
According to Moody's Investors Service, on a pro-forma basis, the QIP will moderately improve the YES Bank's reported common equity tier 1 (CET1) ratio to 8.6 per cent from 8.0 per cent (as of June 30, 2019).
It expects the bulk of Bank's operating profits to get consumed by loan-loss provisions over the next 12-18 months, and thus not support internal capital generation.
The global rating agency, on August 28th, downgraded its long-term foreign currency issuer rating, citing the bank’s capital raise that fell short of its expectations.
"The downgrade of YES Bank's ratings takes into account the lower than expected amount of capital raised by the bank recently; and the risk that the substantial decline in the bank's share price will challenge its ability to raise sufficient capital to maintain the rating at its previous level," it said.