Ajit Karn
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Yes Bank AT1 Bonds: Yes Bank has got a big blow from the Bombay High Court. Bombay HC’s important decision has come regarding AT1 bonds. HC has considered the court to zero the value of AT1 bonds wrong. Financial technology company 63 moons technologies has given this information in a press release. According to 63 moons, the High Court has rejected the decision of the bank administrator, in which the value of AT1 bonds was reduced to zero. AT1 bonds are bonds with no maturity, but provide good returns to the investors.
Investors accused the bank
The bondholders of Yes Bank challenged the decision of the bank administrator to zero the value of AT1 bonds in the Bombay High Court. The bondholders alleged that the bank employees had misled at the time of sale of these bonds and sold it as a type of fixed deposit. In the event of bank failure, the risk of the value of the bond becoming zero was not mentioned.
The Bombay High court order in the Yes Bank case coming a day before the lender announces its quarterly is just…damn.
This was supposed to be a good news quarter for Yes Bank (NPA cleanup, Closing fund raising).
Terrible luck.
— Vishwanath Nair (@Vishwanath4389) January 20, 2023
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The High Court order can be a big blow for Yes Bank as the liability of AT1 bonds worth Rs 8,415 crore can be revived. Several mutual funds also had exposure to AT1 bonds of Yes Bank. Financial technology company Sixty Three Moons also invested in AT1 bonds worth Rs 300 crore. In March 2020, when the Reserve Bank prepared a plan to bail out the bank, the value of AT1 bonds became zero in it. However, then the argument was given that the investors were aware of the risk.
