Yes Bank Ltd. is returning to the bond market for the first time since the Indian private lender wrote off a risky local note in 2020. According to reports from Bloomberg, the bank has appointed arrangers for a potential dollar bond issue and plans to sell a benchmark-sized three-year US dollar-denominated note. The proposed dollar issuance comes as other Indian lenders have raised $5.27 billion in two months, spurred by the Reserve Bank of India's measures in June to boost capital inflows to support the rupee. As per Bloomberg, Yes Bank is scheduled to begin discussions with fixed-income investors from Monday, signaling its commitment to the market comeback and testing overseas investor appetite after the controversial 2020 AT1 debt write-off.
The entry of Japan's Sumitomo Mitsui Banking Corporation (SMBC) as the largest shareholder has fundamentally strengthened Yes Bank's institutional positioning, according to the lender at its annual general meeting. SMBC, part of Sumitomo Mitsui Financial Group and a Global Systemically Important Bank, holds a 24.9 per cent stake in Yes Bank. The partnership brings not only capital but also strategic value through enhanced capabilities in corporate banking, governance practices and risk management, besides providing access to cross-border business opportunities. State Bank of India (SBI), which was earlier the largest shareholder, continues to hold a 10.8 per cent stake in the bank, maintaining its position as a significant institutional investor.
Yes Bank has benefited from a series of ratings upgrades on its various local-currency notes over the years. According to Bloomberg, Crisil Ratings upgraded Yes Bank's rupee infrastructure bonds and Basel III-compliant Tier 2 debt to AA in August from AA-, citing sustained improvement in Yes Bank's earnings profile. The bonds were rated A- at the start of 2023. On the international front, Moody's upgraded Yes Bank's long-term issuer rating to Ba1 with a stable outlook, while S&P Global Ratings assigned the bank an inaugural international issuer credit rating of BB+, also with a stable outlook. Domestically, all rating agencies now rate the bank AA or higher, with CARE Ratings, India Ratings and CRISIL assigning AA+ rating with a stable outlook, while ICRA rated it AA with a stable outlook.
India's bond and loan markets are experiencing a surge in dollar demand from Indian lenders racing to boost the leverage on foreign currency deposits offered to overseas citizens. As reported by Bloomberg, this rush follows the central bank's campaign to attract capital from the country's 35-million-strong diaspora to stabilize the rupee and replenish its foreign-exchange reserves. India has drawn more than $50 billion from its overseas citizens since June, prompting the Reserve Bank of India to close the special window for attracting foreign-currency deposits a month ahead of schedule. The surge highlights strong demand for foreign-currency funding among Indian lenders and comes as Yes Bank seeks to tap the international debt market once again.
