Fitch rates Dena Bank bond A(ind)

Fitch Ratings said it assigned an A+(ind) national long-term issuer rating to India-based Dena Bank and an A(ind) national long-term rating to the bank's Rs. 3 billion unsecured subordinated upper tier 2 bond issue. The agency also upgraded its individual rating to D/E from E and affirmed its support rating at 4.

The outlook is stable.

The upper tier 2 bond is rated one notch below the long-term rating of the bank, in accordance with Fitch's criteria for national ratings of such instruments. The bond has a tenor of 15 years with a call and coupon step-up option after 10 years. Interest is not payable if the capital adequacy ratio is below the regulatory minimum (currently 9%) and is cumulative. Redemption will require the prior approval of the Reserve Bank of India.

The agency said the upgrade of Dena Bank's individual rating reflects the considerable improvement in the bank's reported asset quality and solvency indicators over the past three years.

The ratings also factor in the bank's moderately small size and below-average financials compared with other government banks in India, Fitch said.

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