Fitch Affirms Preferred Share Rating of the Denali Fund at 'AAA'

  Fitch Affirms Preferred Share Rating of the Denali Fund at 'AAA'

Business Wire

CHICAGO -- January 11, 2013

Fitch Ratings has affirmed the 'AAA' rating assigned to the following
preferred shares issued by The Denali Fund Inc. (NYSE: DNY), a closed-end fund
co-advised by Boulder Investment Advisers LLC (BIA) and Stewart Investment
Advisers (SIA):

--$21,950,000 of auction preferred shares (APS), series A, with a liquidation
preference of $25,000 per share.

KEY RATING DRIVERS

The affirmation follows Fitch's review of DNY and reflects:

--Sufficient asset coverage relative to Fitch's published criteria;

--The structural protections afforded by mandatory de-leveraging provisions in
the event of asset coverage declines;

--The legal and regulatory parameters that govern the fund's operations;

--The capabilities of BIA as the investment advisor.

Fitch's ratings on the APS speak only to timely payment of dividends and
principal in accordance with the terms of the APS and not to potential
liquidity in the secondary market.

ASSET COVERAGE

At the time of the rating affirmation, the fund's asset coverage ratio for
preferred stock, as calculated in accordance with the Investment Company Act
of 1940 (1940 Act), was in excess of 200%, which is the minimum asset coverage
required by the 1940 Act. Also, at the time of this affirmation, the fund's
asset coverage ratios, as calculated in accordance with the Fitch total and
net overcollateralization tests per the 'AAA' rating guidelines outlined in
Fitch's applicable criteria were in excess of 100%, which are the minimum
asset coverage amounts deemed consistent with an 'AAA' rating.

Should the asset coverage tests of the APS decline below their minimum
threshold amounts (as tested on the last business day of each month) and are
not cured within a pre-specified timeframe of seven business days, the
governing documents require the fund to reduce the leverage in a sufficient
amount to restore compliance with the applicable asset coverage tests within a
specified timeframe.

FUND PROFILE

The Denali Fund Inc. is a non-diversified, closed-end management investment
company, registered under the Investment Company Act of 1940, as amended, that
commenced investment operations in September 2002. The fund's primary
investment objective is achieving a total return consistent with dependable,
but not assured, cash flow. The fund invests primarily in common stocks,
including dividend-paying common stocks such as those issued by utilities,
real estate investment trusts and closed-end registered investment companies.
The fund also invests in fixed income securities such as U.S. government
securities, preferred stocks, and bonds. The fund invests primarily in
securities of U.S.-based companies and to a lesser extent in foreign equity
securities and sovereign debt, in each case denominated in foreign currency.

As of Nov. 30, 2012, common equity securities constituted 80% of the
portfolio, auction-rate preferred stock issued by other closed-end funds
comprised 5% of the portfolio across two securities, a limited partnership
investment in one long-short equity fund represented approximately 11% of the
portfolio. The remaining balance consisted of cash equivalents and foreign
currency positions.

With respect to the fund's investments in auction-rate preferred stock issued
by other closed-end funds, the fund utilizes a third party pricing service to
price such securities. Fitch affords these types of assets 40% price credit in
its asset coverage tests, consistent with its treatment of the preferred stock
asset class outlined in its rating criteria.

The fund has invested 22% of total assets in common stock of Berkshire
Hathaway, Inc., which Fitch currently views as meeting the definition of a
broadly diversified investment portfolio or holding company. As such, Fitch
utilizes a higher maximum issuer concentration threshold at 20% for this
exposure (in contrast to the maximum 10% threshold utilized for largest
issuers per Fitch's criteria) when calculating Fitch total and net
overcollateralization tests.

The fund has no restrictions on its ability to invest in foreign securities.
Fitch notes that potential exchange rate risk associated with investments in
foreign denominated securities is included as part of Fitch's assessment of
the sufficiency of asset coverage available to rated APS.

THE ADVISOR

Boulder Investment Advisers, LLC and Stewart West Indies Trading Company, Ltd.
(operating under the name Stewart Investment Advisers) act as the
co-investment advisers to the fund. As of Dec. 31, 2012, the co-investment
advisors along with Rocky Mountain Advisers, LLC, an affiliate, had
approximately $991.9 million of assets under management.

RATING SENSITIVITY

The rating assigned to the APS may be sensitive to material changes in the
leverage composition, credit quality of portfolio assets or market risk
profile of the fund. A material adverse deviation from Fitch guidelines for
any key rating driver could cause the ratings to be lowered by Fitch.

For additional information about Fitch rating guidelines applicable to debt
and preferred stock issued by closed-end funds, please review the criteria
referenced below, which can be found on Fitch's web site at
'www.fitchratings.com'.

The sources of information used to assess this rating were the public domain,
BIA and SIA.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Closed-End Fund Debt and Preferred Stock Rating Criteria' (Aug. 15, 2012).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686101

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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE '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.

Contact:

Fitch Ratings
Primary Analyst
Russ Thomas, +1-312-368-3189
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Yuriy Layvand, +1-212-908-9191
Director
or
Committee Chairperson
Peter Patrino, +1-312-368-3266
Managing Director
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com