Fitch lowers some Dena debt

Fitch Ratings said it downgraded Dena Bank's Rs. 4.25 billion upper Tier 2 bonds and Rs. 1.6 billion perpetual Tier 1 bonds to A-(ind) from A(ind) and affirmed its national long-term rating at A+(ind), Rs. 4.5 billion lower Tier 2 debt at A+(ind), individual rating at D and support rating at 4.

The outlook is stable.

The agency said Dena's financials remain vulnerable to the challenging operating environment, and given its limited flexibility to raise equity capital, the need for capital conservation - including coupon deferrals on optionally deferrable hybrid instruments, if necessary - is higher. This led Fitch to widen the notching between the bank's hybrid instruments.

Dena's national long-term rating reflects its modest operating profitability and below-average capitalization, the agency said.

The rating also factors in Dena's retail deposit franchise - which, thanks to its government ownership, has remained resilient - and its improving profitability due to lower loan loss and investment depreciation provisions, Fitch said.

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