OREANDA-NEWS. Fitch Ratings affirms the 'AAA' ratings of mandatory redeemable preferred stock (MRPS) issued by DNP Select Income Fund Inc. (NYSE: DNP), a non-diversified closed-end fund:

--$132,000,000 of series A MRPS, due 2019, at 'AAA';
--$60,000,000 of series B MRPS, due 2021 at 'AAA';
--$75,000,000 of series C MRPS, due 2024 at 'AAA';
--$33,000,000 of series D MRPS, due 2021 at 'AAA'.

KEY RATING DRIVERS
The rating affirmation primarily reflects:
--Sufficient asset coverage provided to the MRPS shares as calculated per the fund's over-collateralization (OC) tests;
--The structural protections afforded by mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines;
--The legal and regulatory parameters that govern the fund's operations;
--The capabilities of Duff & Phelps Investment Management Co. as investment advisor.

ASSET COVERAGE
The fund's asset coverage ratio, as calculated in accordance with the Fitch total and net overcollateralization tests (Fitch OC Tests) per the 'AAA' rating guidelines outlined in Fitch's applicable criteria, were in excess of 100%. These are the minimum asset coverage guidelines required by the fund's governing documents, and evaluated as such by Fitch to arrive at the assigned rating levels.

The Fitch OC tests calculate standardized asset coverage by applying haircuts to portfolio holdings based on riskiness and diversification of the assets and measuring their ability to cover both on- and off-balance-sheet liabilities at the stress level that corresponds to the assigned rating.

At closing, the fund's asset coverage ratio for total leverage, including the MRPS, as calculated in accordance with the Investment Company Act of 1940 (the 1940 Act), was in excess of 225%. Also at closing, the fund's asset coverage ratio for total debt, as calculated in accordance with the 1940 Act, was in excess of 300%. These are the minimum asset coverage ratios required by the 1940 Act and the fund's governing documents.

In the event of breaches to any of the above thresholds, the fund is required to restore compliance per structural protections described below.

STRUCTURAL PROTECTIONS
Should the MRPS asset coverage tests decline below their minimum threshold amounts (as tested weekly) the fund is required to deliver notice to the MRPS purchasers within five days of becoming aware of such fact.

The fund manager is required to cure the breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC Test breaches), or by reducing leverage in a sufficient amount (for both the Fitch OC Tests and 1940 Act asset coverage test breaches) within a pre-specified time period (a maximum of 45 business days).

THE FUND
The fund's objectives are current income and long-term growth of income with capital appreciation as a secondary objective. The fund seeks to achieve its investment objectives by investing primarily in a diversified portfolio of equity and fixed income securities of companies in the public utilities industry. The fund's investment strategies have been developed to take advantage of the income and growth characteristics and historical performances of securities of companies in the public utilities industry. Under normal conditions, more than 65% of the fund's total assets will be invested in securities of public utility companies engaged in the production, transmission or distribution of electric energy, gas or telephone services.

Duff & Phelps Investment Management Co. (Duff & Phelps) is the fund manager and responsible for the implementation and execution of the investment strategy on a day-to-day basis. Duff & Phelps is an SEC registered investment advisor with $10.6 billion in assets under management as of March 31, 2015. Duff & Phelps' managed mutual funds and closed-end funds provide investment opportunities in global infrastructure, global real estate and municipal and corporate bonds.

RATING SENSITIVITIES
The ratings assigned to the preferred shares may be sensitive to material changes in the leverage composition, portfolio credit quality or market risk of the funds, as described above. A material adverse deviation from Fitch guidelines for any key rating driver could cause ratings to be lowered by Fitch. The funds have the ability to assume economic leverage through derivative transactions which may not be captured by the fund's Preferred Shares Asset Coverage test.

The fund currently does not engage in derivative activities for speculative purposes and does not envision engaging in such activity in the future. Material derivative exposure in the future could have potential negative rating implications if it adversely affects asset coverage available to rated preferred shares.