Yes Bank Returns To Bond Market After 2020 AT1 Write-Off

Yes Bank is preparing to tap the dollar bond market again, more than six years after it permanently wrote off its Additional Tier 1 (AT1) debt. The bank plans to issue a benchmark-sized three-year US dollar note and has started calls with fixed-income investors.

The proposed issue comes after a series of rating upgrades and follows Sumitomo Mitsui Financial Group's banking unit taking a roughly 25% stake in the lender in 2025.

What Is Yes Bank Planning?

Yes Bank has hired arrangers for the proposed dollar bond sale and plans to issue a benchmark-sized three-year US dollar note.

The bank's dollar bond carries a Ba1 rating from Moody's Ratings and BB+ from S&P Global Ratings. Both ratings are one notch below investment grade.

The proposed sale comes as Indian lenders have stepped up overseas borrowing. Banks raised around $5.27 billion over two months, helped by measures announced by the Reserve Bank of India in June to encourage capital inflows and support the rupee.

Yes Bank did not immediately respond to requests for comment on the proposed issue.

What Changed At Yes Bank Since The 2020 AT1 Write-Off?

Yes Bank's return to the bond market follows a major restructuring of the lender in 2020. The AT1 securities were hybrid instruments that counted towards the bank's capital. Such instruments can be written off when specified triggers are breached.

The bank permanently wrote off its AT1 debt in March 2020 after Indian authorities intervened and took control of the lender.

A consortium led by State Bank of India subsequently backed the rescue of Yes Bank. The lender has since worked through a turnaround, with its debt ratings improving over the years.

In August, Crisil Ratings raised the ratings on Yes Bank's rupee-denominated infrastructure bonds and Basel III-compliant Tier 2 debt to AA+ from AA-. Those bonds had carried an A- rating at the start of 2023.

The bank also gained a new major shareholder in 2025. Sumitomo Mitsui Financial Group's banking unit acquired roughly 25% of Yes Bank, becoming its largest shareholder.

Why Are Indian Banks Returning To The Dollar Bond Market?

The proposed Yes Bank issue comes amid stronger demand for foreign-currency funding among Indian lenders. Banks have been raising dollars as the domestic bond and loan markets benefit from increased foreign-currency deposits.

The push follows the RBI's efforts to attract funds from India's 35 million overseas diaspora and strengthen foreign-exchange reserves. India has attracted more than $50 billion from overseas citizens since June. The central bank subsequently closed the special window for attracting foreign-currency deposits one month ahead of schedule.

For Yes Bank, the planned dollar note would mark its return to the international bond market after the 2020 crisis. The proposed issue will also test investor appetite for the lender's debt following its restructuring, subsequent ratings upgrades and change in ownership.

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