RBI bars YES Bank from coupon payment on Upper Tier II bonds

The Reserve Bank of India has controlled private area loan specialist YES Bank to pay premium (coupon) on the Tier II bonds as its capital sufficiency proportion was beneath administrative prerequisites.
The private loan specialist had moved toward banking part controller RBI looking for endorsement to pay enthusiasm due as on June 29, 2020 for Upper Tier II Bonds. These Unsecured Non-Convertible Upper Tier II bonds convey coupon of 10.25 percent.
Its general capital sufficiency proportion remained at 8.5 percent at end of March 2020 with Common Equity level I (CET I) of 6.3 percent. Its stock was exchanging 1.8 percent lower on BSE. The capital sufficiency proportion is beneath the administrative necessities.
The bank educated trades that RBI has communicated its failure to agree to bank's solicitation for installment of Interest due, since it doesn't meet the base capital necessities right now. Along these lines, the bank would be not able to pay Interest or coupon on the said Upper Tier II Bonds.
The Interest sum due and staying unpaid will be amassed and be paid later, subject to Bank agreeing to the specified administrative necessity, it included.
Bank has plans for raising value money to improve capital ampleness proportion, bolster development and make cushions for Covid-19. Its investors' have affirmed proposition for a total capital raise of up to Rs 15,000 crore.
This capital raising from business sectors would be additionally helped by wellsprings of natural capital (inside age). It intends to do as such by goals of Stressed resource goals and resource sell-down.

The conceded charge resource of Rs 6,118 crore deducted from total assets for processing CET 1, speaking to about 2.55 percent in CET 1 might accessible to the bank after some time, as indicated by Bank introduction.

'Freak trade': Investors push up yields of Indiabulls Housing bonds to 43%

Company News
Investors on Thursday pushed up the yields of a few Indiabulls Housing Finance (IHFL) bonds to as much as 43 per cent, which a senior executive of the company termed as ‘freak trades’.
Late on Thursday evening, the company notified exchanges that it offered to buy back all its bonds maturing in November and December at par. “The company will also evaluate further premature redemption of its non-convertible debentures from time to time,” IHFL said in its filing.
This would take care of Rs 1,000-core of bonds outstanding. According to sources, the company may also consider an additional Rs 2,500 crore of bond buybacks in the days to come.
A five-year maturity, 8.75 per cent coupon bond, issued on September 26, 2016, with an annual interest payment schedule, shot up to 42.81 per cent.
According to the BSE website, the last traded price of the bond was Rs 60.38, for a trade size of Rs 135 crore. There were two other bonds that were traded, albeit for a small value of Rs 10 crore and Rs 65 crore, respectively, in which the yields touched 43.04 per cent and 33.51 per cent, respectively. The coupons of these bonds were at 8.90 per cent (maturing on September 26, 2021) and 8.57 per cent (maturing on March 30, 2022).
Gagan Banga, managing director and vice-chairman of IHFL, said these were ‘freak trades’ done near the end of the market closure.“There are some motivated groups of people dragging down our equity prices. We are taking a number of actions against them,” said Banga.

 Assuring that the sharp rise in bond yields on a thinly traded basis is not a reflection of the company’s fundamentals but a feature of a shallow bond market, Banga said the company has over Rs 18,000 crore of cash that would cover its repayment obligations for the next 12 months at least.

Why India's $10 billion foreign bond sale plan may never take off

Company News

India’s foray into international debt markets may consist of little more than sound and fury, as the nation struggles to shed decades of trepidation about borrowing in foreign currencies.
A fanfare announcement in the July budget has been followed by the removal of the official driving the sale, objections from the prime minister’s office, and finally an admission from Finance Minister Nirmala Sitharaman that no work has been done on the mooted $10 billion offering.
India’s first venture into the overseas bond market would shift part of its 7-trillion-rupee ($100 billion) borrowing abroad, and enable it tap a wider pool of funds. But fears that it may increase the nation’s reliance on foreign borrowing has brought together an array of opponents arguing that currency volatility and elevated debt costs would ruin the country.
“India has a historical aversion to issuing in foreign currency, and this has been institutionalized over time,” said Bryan Carter, London-based head of emerging-market debt at BNP Paribas Asset Management. Policymakers “see it as an unnecessary risk to open up to foreign capital flows and subject themselves to the mercy and whims of international investors.”
The fear is that India may tread the well-worn paths of other developing countries such as Argentina and Greece who were saddled with sizable foreign borrowings after they failed to balance their budgets.

“The biggest benefit of the sale is the confidence that it signals to the world at large about India being confident of opening its economy,” said Duvvuri Subbarao, a former governor of the Reserve Bank of India. “But the fear and concern that strike me are that this will become a thin end of the wedge. Once we see that it has become very successful, we might keep on doing it and get into pressure situations needlessly.”...Read More