Moody’s may downgrade YES Bank on liquidity woes
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.