Yes Bank keeps options open on AT-1 bond coupon payments

Yes Bank has indicated it will make a determination on coupon payments for its AT-1 bonds at a later date, maintaining that it holds discretionary powers in the matter. The private sector lender is currently assessing the implications of the Supreme Court's recent judgment that quashed the earlier write-off of Rs 8,415 crore, which had wiped out investor holdings in the instruments.

The bank's position suggests it is taking time to evaluate the legal ramifications of the court order before communicating its stance to bondholders. AT-1 bonds, which are perpetual securities used to shore up a bank's capital, typically carry coupons that are discretionary in nature, meaning financial institutions can defer or skip payments under certain conditions.

The Supreme Court's intervention came after a batch of retail investors challenged the write-off decision taken by the Reserve Bank of India and Yes Bank in March 2020, when the lender faced severe financial distress. The court's ruling has reopened questions about the treatment of these hybrid securities and the rights of investors.

Market observers are awaiting Yes Bank's formal announcement on the coupon matter, which could have significant implications for bondholders and the broader AT-1 market in India. The bank's deliberate approach reflects the complexity of the situation and the need to balance regulatory compliance with contractual obligations to investors.