Yes Bank shares end 7% lower after Moody’s downgrades rating to ‘Ba3’

Shares of India’s major private sector lender Yes Bank slumped on Wednesday, after rating agency Moody’s downgraded the bank’s rating to ‘Ba3’ from ‘Ba1’. Notably, Yes Bank emerged as the biggest loser in the Sensex pack, after Moody’s Investors Service downgraded the lender’s long-term foreign-currency issuer rating, terming the bank’s outlook as negative. Yes Bank shares closed 7.5% lower at Rs 59.50 on BSE. Earlier in the day. the stock was down despite media reports that the bank’s board is mulling a $1.2 billion fund raiser. According to a report by ET Now, Yes Bank’s board  of directors are likely to meet soon on Friday to discuss a mega fund raiser, CNBC TV18 reported citing sources. The equity infusion will be subject to shareholder approval. The development comes after Yes Bank raised Rs 1,930 crore through Qualified Institutions Placement (QIP) route last week. It allotted 23.1 crores equity shares to eligible qualified institutional buyers at Rs 83.55 per share.

Yes Bank shares continue to remain under pressure, even as investors were worried about the valuation of fraud-hit CG Power in which the bank holds more than 12% stake. Yes Bank shares had closed at a fresh all-time low of Rs 56.30 last week. The recent plunge in Yes Bank shares comes after Gautam Thapar-controlled CG Power informed the exchanges that that it found some unrelated suspicious transactions while going through normal financing assessment. “The total liabilities of company and the group may have been potentially understated by about Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as on 31 March 2018,” CG Power said in its exchange filing on Tuesday. As at the end of June 2019, Yes Bank had a 12.8% stake in CG Power. CG Power shares are trading 5% higher at Rs 9.50 on BSE.

Among other things, CG Power had informed that certain assets of the firm were purportedly provided as collateral without due authority; and the Company was made a co-borrower and/or guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation. “The moneys so obtained were immediately and without due authorisation routed out of the Company, either by itself or from its subsidiaries or ostensibly unrelated parties to certain related parties,” CG Power had said.

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