Yes Bank Hesitant on AT1 Bond Coupon Payments, Plans Supreme Court Review Petition

Yes Bank is reluctant to make coupon payments on Additional Tier-1 (AT1) bonds this year, despite a recent Supreme Court ruling. The apex court had recently set aside the cancellation of AT1 bonds worth Rs 8,400 crore, which were written off during the bank's restructuring in 2020. Standing by its original decision, the bank is now preparing to file a review petition against the court verdict.

Market experts note that under the terms of AT1 bonds, deciding whether to pay coupons remains at the discretion of the bank, and withholding payments is not classified as a standard default. Reinstating these bonds could potentially reduce the bank's Common Equity Tier-1 (CET1) capital ratio by around 240 to 250 basis points. Yes Bank management stated that it is currently evaluating all legal and financial options available.

Uncertain about the timeline and clarity of coupon disbursements, retail investors have approached the debenture trustee for assistance. The final outcome of the review petition will likely dictate the next steps for bondholders and the bank.