Yes Bank Abandons $500mn Bond Issue Amid Higher Yield Demands

Yes Bank has withdrawn its plan to raise $500mn through three-year US dollar bonds amid higher yield demands from investors. The lender had appointed bankers last week to arrange the proposed bond issue, but investors were seeking yields 30-40 basis points higher than normal.

The Reserve Bank of India's decision to bring forward the closure of its dollar deposit window on August 31 has led to a rush of Indian lenders seeking to tap the dollar debt market. As a result, investors are demanding higher yields to compensate for the increased risk.

CreditSights had estimated fair value for Yes Bank's proposed notes at a spread of 170-180 basis points over US Treasuries, implying a yield of around 6.035%-6.135%. However, investors were demanding a spread of around 200 basis points over US Treasuries.

Yes Bank last accessed the dollar debt market in 2018, raising $600mn through five-year securities. The lender also wrote off more than INR84bn ($880.32mn) of perpetual bonds in the domestic market, which dented investor confidence.