Fitch cuts Doral Bank to D

Fitch Ratings said it downgraded the long-term issuer default rating of Doral Bank to D from C following the FDIC's announcement that the bank is closed and under receivership.

Doral Bank's viability rating of ‘f’ indicates the agency’s view that the bank failed leading to regulatory intervention.

Fitch also downgraded the ratings of the bank's parent, Doral Financial Corp., to D. While the regulatory shutdown impacts Doral Bank, the agency believes that Doral Financial will likely default or file for bankruptcy in the near term as the company's ability to meet financial obligations has deteriorated significantly following the seizure of its operating bank.

The ratings for the senior notes and preferred stock remain at C, which is Fitch's lowest debt level rating. The agency also assigned recovery ratings to the bank's senior notes and preferred stock outstanding.

Based on the company's regulatory Y9LP filing as of Dec. 31, in Fitch's view, the recovery prospects for the senior notes and the preferred obligations, the latter of which are already in deferral, are very poor given the minimal level of assets and cash that the holding company possesses subsequent to the seizure of Doral Bank. Further, the FDIC estimates that it will incur a $749 million loss, further supporting the view that recovery for unsecured holding company creditors are expected to be minimal.

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