Fitch downgrades DBN from BB+ to BB

Fitch Ratings Agency has downgraded the Development Bank of Namibia (DBN)'s Long-Term Issuer Default Ratings (IDR) from BB+ to BB, giving it a stable outlook.

The rating, revealed on the agency's website on 09 October 2019, considers Namibia's weaker ability to provide support to the Bank, as reflected in the sovereign downgrade.

The rating follows the downgrade of the Namibia's long-term foreign-currency IDR from BB+ to BB on 01 October 2019.

Fitch said its assessment of support also reflects Namibia's high support propensity for DBN given the bank's long-standing and clearly defined policy role in funding economic growth and social development in Namibia.

It also based its assessment on the Bank's 100 per cent state-ownership and oversight by the Ministry of Finance; and the sovereign guarantees on a significant part of the bank's wholesale funding.

Fitch indicated that DBN's national ratings reflect the rating agency's opinion of the bank's creditworthiness relative to other issuers and issues within the country and in South Africa.

Namibian issuers are rated on the South African National Rating scale.

In terms of DBN's viability, Fitch said it does not assign a Viability Rating to DBN, as is usual for development banks

'This is because its business model depends on state support and in our view would not be viable on a commercial basis,' it said.

Furthermore, DBN's ratings are also sensitive to a reduced propensity of the authorities to support the bank.

This, the agency said, could be indicated by a change in DBN's policy role, a material reduction in government ownership, or in funding guarantees for the bank, Fitch said.

Source: Namibia Press Agency