Axis Trustee seeks contempt action against Yes Bank over unrestored AT-1 bonds

what happened

Axis Trustee Services has filed a contempt petition in the Supreme Court of India against Yes Bank and some of its officials and directors. According to Moody's, which republished the report from Mint, the trustee says the bank has not complied with the October 15 judgment restoring Rs 8,415 crore of additional tier-I bonds. The petition, filed on November 6, asks the court for orders on compliance and restoration of the securities.

Before filing, Axis Trustee had sent the bank a notice on October 28 demanding that the bonds be restored within three days. Yes Bank replied that it is fully committed to the court's ruling but is still reviewing its implications and legal options. It rejected claims of wilful disobedience as baseless.

Experts cited in the report say restoring the bonds would revive investors' rights but would not make the principal immediately payable.

why it matters

For markets this is a dispute over one bank's debt, yet it shows how long the effects of the 2020 write-off of AT-1 bonds are lasting. The value investors eventually recover will depend on market liquidity and the price at which the restored bonds trade.

market impact

Yes Bank AT-1 bonds: uncertainty over restoration timing weighs on their valuation

tags

instruments