Yes Bank may skip AT1 coupons even after top court reversed write-off

what happened

According to Reuters, two people familiar with the matter say Yes Bank is probably not going to make this year's coupon payments on its additional tier-1 bonds, even though India's Supreme Court has reversed the write-off the lender imposed during its 2020 rescue. The bank reportedly intends to ask the court for a review of its decision.

Retail holders say they did not get the coupon due October 18, three days after the ruling. In a letter to Axis Trustee Services, reviewed by Reuters, they asked the trustee to get written confirmation on whether the payment was made, cancelled or still pending, quoting the court order that coupons should stay unaffected. Sources counter that the bond terms leave payment to the bank's discretion and that the matter depends on the bonds returning to the balance sheet. Yes Bank did not comment.

why it matters

The 84 billion rupee ($886 million) write-off of AT1 bonds was set aside after the Supreme Court upheld a 2023 Bombay High Court verdict. Yes Bank's profit and loss account still shows a debit balance of 52.79 billion rupees ($557 million), and losses from fiscal 2020 and 2021 are expected to be offset only by fiscal 2028, adding to doubts over the coupon decision. The case shows how a single court ruling can reopen legacy debt questions for Indian banks.

market impact

Yes Bank AT1 bonds: coupon uncertainty pressures the paper and sentiment in Indian bank debt

tags

instruments