Moody’s may down­grade YES Bank on liq­uid­ity woes

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - —Reuters

Ben­galuru: Moody’s placed YES Bank Ltd’s rat­ing un­der re­view for down­grade on Tues­day, cit­ing the In­dian pri­vate-sec­tor lender’s exposure to some weak fi­nan­cial com­pa­nies.

“The re­view for down­grade takes into ac­count Moody’s ex­pec­ta­tion that the on­go­ing liq­uid­ity pres­sure 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,” the rat­ing agency said in a note.

Shares of YES Bank, which rose as much as 5.6% in­tra­day, pared some gains to settle 2.7% higher on the NSE Nifty that was up 0.36%.

Last week, De­wan Hous­ing Fi­nance Corp Ltd de­lay­ing pay­ments on some of its bonds fanned fears of a cri­sis in the shadow bank­ing sec­tor.

The sec­tor has been reel­ing un­der a liq­uid­ity crunch trig­gered by a se­ries of de­faults at ma­jor lender In­fra­struc­ture Leas­ing and Fi­nan­cial Ser­vices last year.

At March-end, Mum­baibased YES Bank’s exposure to hous­ing fi­nance com­pa­nies (HFC) and non-bank fi­nance com­pa­nies (NBFC) was 6.4% of its to­tal exposure, Moody’s said, adding that the bank had a 7% di­rect exposure to the com­mer­cial and res­i­den­tial real es­tate sec­tor, which is also un­der pres­sure.

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