Bondholders of Yes Bank’s additional tier one (AT1) instruments have flagged concerns regarding missing coupon payments, raising questions about the lender’s payment processes in the wake of a recent Supreme Court judgment. The annual coupon on the 9% bonds fell due on October 18, only three days after the Supreme Court issued an order restoring ₹8,415 crore worth of these principal instruments. Investors report that they have not received these payments, prompting them to formally urge the designated trustee to seek immediate clarification from the private lender.
An association of bondholders has written to Axis Trustee Services to address the uncertainty. According to the letter, investors are calling upon the trustee to obtain direct, written confirmation from Yes Bank to determine whether the October 18 coupon has been paid, formally cancelled, or remains outstanding. This development follows a legal milestone where the Supreme Court upheld a Bombay High Court decision to set aside the write-down of these specific AT1 bonds, which had been executed as part of the bank’s reconstruction process in March 2020.
The legal judgment has been a central point of reliance for investors, who noted that the court explicitly stated the annual coupon rate would remain unaffected by the outcome of any appeals. Furthermore, the court ruling indicated that payments were expected to be made in accordance with the terms laid out in the original information memoranda for the instruments. Bondholders expect the lender to adhere to these official guidelines, yet the lack of payment following the October 15 court order has created significant ambiguity among the investor community.
The urgency of the situation is further heightened by the approach of another significant payment deadline. The annual coupon on the 9.5% AT1 bonds is scheduled for December 23. Concerned by the current lack of transparency, bondholders have requested that the trustee secure clarity well in advance regarding the treatment of this upcoming payment. Their request includes details on the relevant record date, the identification of eligible beneficial owners, and the specific arrangements being made by the bank to facilitate the transaction.
The restoration of the AT1 bonds represents a major turning point for those who held the instruments during the bank’s turbulent restructuring period. By seeking intervention from Axis Trustee Services, bondholders aim to ensure that the bank aligns its operational payments with the legal relief granted by the judiciary. As the December deadline nears, investors remain focused on whether the lender will proactively communicate its strategy for clearing the outstanding dues and meeting upcoming obligations without further delay.
The atmosphere of uncertainty persists as the financial markets await a formal response from the lender. For many bondholders, the issue centers on maintaining the integrity of their investments as established by the Supreme Court’s interpretation of the original bond agreements. The outcome of the request to the trustee is expected to shed light on how the bank intends to proceed with these critical interest payments, potentially setting a precedent for future interactions between the lender and its bondholders.
As of now, the correspondence from the bondholders highlights a clear disconnect between the judicial restoration of their assets and the practical receipt of coupon payments. The role of the trustee has become pivotal in bridging this communication gap, as investors require certainty to manage their portfolios ahead of the next scheduled interest distribution date. Whether the bank provides an immediate resolution or offers a revised timeline remains a key concern for all parties involved in the aftermath of the court-mandated restoration.
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