November 27, 2017 / 10:07 AM / a year ago

Fitch Downgrades Development Bank of Namibia to 'BB+'; Outlook Stable

(The following statement was released by the rating agency) LONDON, November 27 (Fitch) Fitch Ratings has downgraded the Development Bank of Namibia's (DBN) Long-Term Issuer Default Ratings (IDRs) to 'BB+' from 'BBB-', Short-Term IDRs to 'B' from 'F3' and National Long-Term Rating to 'AA+(zaf)' from 'AAA(zaf)'. This follows the downgrade of Namibia's Long-Term IDRs to 'BB+' from 'BBB-' and National Long-term Rating to 'AA+(zaf)' from 'AAA(zaf)' on 20 November 2017. The Outlook on the Long-Term IDRs and National Long-term Rating is Stable. Following the sovereign downgrade, Fitch has also downgraded DBN's Support Rating (SR) to '3' from '2'and revised its Support Rating Floor (SRF) to 'BB+' from 'BBB-'. A full list of rating actions is at the end of this rating action commentary. KEY RATING DRIVERS IDRS, SUPPORT RATINGS AND NATIONAL RATINGS DBN's ratings are equalised with those of the Namibian sovereign. DBN is a policy bank and its IDRs, SR, SRF and National Ratings reflect a moderate probability of support from the Namibian authorities in case of need. Our assessment of support considers the Namibian sovereign's declining ability to support the bank as illustrated by the sovereign's rating downgrade. We continue to believe that the authorities have a high propensity to provide support to DBN given its role, status and 100% state ownership by the Ministry of Finance. In addition, DBN was incorporated through an act of parliament, which means it is not subject to commercial law and enjoys certain protection regarding potential liquidation and winding up. The sovereign also guarantees a significant proportion of the bank's funding. DBN has a clearly defined policy role to finance economic growth and social development in Namibia. The Stable Outlook on DBN's Long-Term IDRs and National Long-Term Rating mirrors that on Namibia's sovereign ratings. RATING SENSITIVITIES IDRS, SUPPORT RATINGS AND NATIONAL RATINGS DBN's IDRs, SR, SRF and National Ratings remain sensitive to changes in the Namibian sovereign ratings. DBN's ratings are also sensitive to a reduced propensity of the authorities to support the bank. This could be indicated by a change in the DBN's policy role, or a material reduction in government control or funding guarantees for the bank. This is not our base case. The rating actions are as follows: Development Bank of Namibia Long-Term Foreign Currency IDR downgraded to 'BB+' from 'BBB-'; Outlook Stable Short-term Foreign Currency IDR downgraded to 'B' from 'F3' Long-term Local Currency IDR downgraded to 'BB+' from 'BBB-'; Outlook Stable Short-term Local Currency IDR downgraded to 'B' from 'F3' Support Rating downgraded to '3' from '2' Support Rating Floor revised down to 'BB+' from 'BBB-' National Long-Term Rating downgraded to 'AA+(zaf)' from 'AAA(zaf)'; Outlook Stable National Short-term Rating affirmed at 'F1+(zaf)' Contact: Primary Analyst Mahin Dissanayake Director +44 203 530 1618 Fitch Ratings Limited 30 North Colonnade London, E14 5GN Secondary Analyst Andrew Parkinson Director +44 203 530 1420 Committee Chairperson Janine Dow Senior Director +44 203 530 1464 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here National Scale Ratings Criteria (pub. 07 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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