Fitch Ratings cut the long-term foreign currency issuer default rating (IDR) on Tata Steel Ltd. (TSL) to ‘BB’ from ‘BB+/Stable’ and placed the company on rating watch evolving (RWE), even as the Cyrus Mistry led firm decided to sell its U.K. business.
Unsecured notes issued by TSL have also been downgraded to ‘BB’ from ‘BB+’ and placed on RWE, said the rating agency. The downgrade reflects the decline in TSL’s profitability and jump in leverage during the financial year ended 31 March, 2016 following challenging market conditions for its operations in India and overseas, especially in the U.K.
The agency also downgraded the long-term foreign currency issuer default rating (IDR) for TSL’s wholly owned subsidiary, Tata Steel UK Holdings Limited (TSUKH), to ‘B’ from ‘B+/Stable’ and placed it on RWE. The downgrade in TSUKH reflects the downgrade of its parent, TSL, and the weak operating environment in the UK and more broadly across Europe.
The RWE reflects uncertainty following TSL’s announcement on March 29, that it was exploring all options for portfolio restructuring in Europe, including the potential divestment of its U.K. operations, in part or in whole. “Considerable uncertainty remains on timing and how the group and its debt will be structured going forward,” said Fitch, which believes TSL’s disposal of its U.K. operations, in part or whole, will result in a change to TSL’s ratings.
0 comments:
Post a Comment