Yes Bank Scraps $500mn Bond Plan Amid Investor Yield Demands

India's Yes Bank has withdrawn its plan to raise $500mn through three-year US dollar bonds after investors demanded higher yields. The bank, which is 24.9% owned by Japan's Sumitomo Mitsui Banking Corporation, had appointed bankers last week to arrange the bond issue.

The Reserve Bank of India's decision to bring forward the closure of its dollar deposit window has led to a rush of Indian lenders seeking to tap the dollar debt market. This has resulted in investors demanding yields 30-40 basis points higher than normal for Yes Bank's proposed bonds, which is significantly higher than the estimated fair value.

CreditSights had estimated that Yes Bank's proposed notes should have 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.

This is not the first time Yes Bank has had to adjust its plans due to investor demand. In 2018, it raised $600mn through five-year securities. However, the bank also wrote off more than INR84bn ($880.32mn) of perpetual bonds in the domestic market, which dented investor confidence.