Fitch Downgrades Investcorp Bank & Subsidiaries' IDR to 'BB+'; Remains on Watch Negative

NEW YORK--(Business Wire)--
Fitch Ratings has downgraded the long- and short-term Issuer Default Ratings
(IDR) respectively of Investcorp Bank BSC (Investcorp) and its subsidiaries
Investcorp SA and Investcorp Capital Ltd to 'BB+' and 'B'. The long-term IDRs
remain on Rating Watch Negative (see full list below).

The downgrade reflects Investcorp's weakened capital position and Fitch's
concerns regarding its ability to raise additional capital to maintain an ample
cushion around earnings volatility. To date, capital commitments have not yet
been sufficient to maintain its current ratings, a key rating driver that Fitch
noted in its last commentary on Feb. 12, 2009. Fitch recognizes that the firm
has aggressively reduced leverage and exposure to hedge funds however; the firm
faces significant debt maturities over the next two years and refinancing
opportunities have been more difficult in this environment.

Current liquidity will satisfy near-term obligations although the firm's cash
cushion will decline. The firm's ability to meet longer-term obligations will
remain under pressure absent additional capital as liquidity and market value of
private equity and real estate investments are expected to remain highly
variable. Fitch believes that exits from private equity and real estate
investments are unlikely over the near term and assets will continue to
experience some declines in value. Any further material declines in client
assets under management (AUM) from redemptions and asset value depreciation will
reduce revenue generation. AUM is a key component of the company's earnings
performance via fees.

Investcorp remains on Rating Watch Negative due to lingering concerns about its
capital levels and lower earnings performance. The Rating Watch may be resolved
at fiscal year end pending further capital raises and financial performance.
Ratings may face an additional notch downgrade if additional capital is not
raised or in the case of negative financial performance and diminished
liquidity. Additional capital raised accompanied by stabilization in the firm's
client AUM levels, asset values, and earnings performance will likely stabilize
the ratings. While there has been some improvement in the firm's fund of hedge
fund performance, Fitch believes it remains too early to be indicative of an
overall trend.

Investcorp's current ratings are supported by the strength of its Gulf-based
franchise, diversified funding mix (by tenor and source), and demonstrated
alternative investment expertise.

Fitch has downgraded the following ratings which remain on Rating Watch
Negative:

Investcorp Bank BSC

--Long-term Issuer Default Rating (IDR) to 'BB+' from 'BBB-';

Investcorp SA

--Long-term IDR to 'BB+' from 'BBB-';

Investcorp Capital Ltd.

--Long-term IDR to 'BB+' from 'BBB-';

--Senior debt to 'BB+' from 'BBB-'.

Fitch has downgraded and removed the following ratings from Rating Watch
Negative.

Investcorp Bank BSC

--Short-term IDR to 'B' from 'F3';

Investcorp SA

--Short-term IDR to 'B' from 'F3';

Investcorp Capital Ltd.

--Short-term IDR to 'B' from 'F3'.

Fitch has not changed the following ratings which remain on Rating Watch
Negative:

Investcorp Bank BSC

--Individual at 'C';

Investcorp SA

--Individual at 'C';

Investcorp Capital Ltd.

--Individual at 'C'.

Fitch has affirmed the following ratings:

Investcorp Bank BSC

--Support '5';

--Support floor 'NF'.

Investcorp SA

--Support '5';

--Support floor 'NF'.

Investcorp Capital Ltd.

--Support '5'.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria, and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance,
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Joo-Yung Lee, 212-908-1560, New York
David Spring, 312-368-3194, Chicago
Ted Kronmiller, 312-606-2332, Chicago
or
Media Relations:
Brian Bertsch, 212-908-0549, New York
Email: brian.bertsch@fitchratings.com

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