Yes Bank makes bond market comeback years after AT1 write-off

Synopsis

Yes Bank is preparing its first dollar bond issuance since its 2020 AT1 debt write-off, planning a benchmark-sized three-year note. The move follows a turnaround, ratings upgrades and Sumitomo Mitsui Financial Group’s 2025 stake purchase. Strong foreign-currency deposit inflows and RBI measures have also boosted Indian lenders’ overseas borrowing activity.

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, and has hired arrangers for a dollar issuance, according to people familiar with the matter.

The bank plans to sell a benchmark-sized three-year US currency note and is holding calls with fixed-income investors starting Monday, said the people who asked not to be identified because the information is private. The proposed sale comes at a time when 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.

Yes Bank didn’t immediately reply to an email seeking comment.

The lender permanently wrote off Additional Tier 1 debt — notes that qualify as capital for banks and are hybrid securities which can be written off if certain triggers are breached — in March 2020. Indian authorities stepped in to seize Yes Bank, which was ultimately rescued by a consortium led by the country’s largest lender, State Bank of India.

Since then, Yes Bank has undergone a steady turnaround. Sumitomo Mitsui Financial Group Inc.’s banking unit bought a roughly 25% stake in the firm in 2025, becoming its biggest shareholder. Yes Bank has also benefited from a series of ratings upgrades on its various local-currency notes over the years.

Crisil Ratings raised the 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.

Yes Bank’s dollar bond is rated Ba1 by Moody’s Ratings and BB+ by S&P Global Ratings, just one notch below investment grade rating.

India’s bond and loan markets are firing up due to a surge in dollar demand from Indian lenders racing to boost the leverage on foreign currency deposits offered to overseas citizens.

The 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.

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