Moody's downgrades Tata Steel's outlook to negative
Global rating agency Moody's on Wednesday downgraded outlook on Tata Steel from stable to negative following challenging conditions faced by Tata Steel UK, which is the holding company for Corus and others.
By PTI |
NEW DELHI: Global rating agency Moody's on Wednesday downgraded outlook on Tata Steel from stable to negative following challenging conditions faced by Tata Steel UK, which is the holding company for Corus and others.
"Moody's Investors Services changed Tata Steel outlook on its 'Ba 1' corporate family rating to negative from stable. This reflects change in outlook for Tata Steel UK from stable to negative and the close linkage between the credit profiles of the two entities," the rating agency said in a statement here.
"The change in outlook reflects the more challenging operating conditions now facing Tata Steel UK as a result of the likely deterioration in demand in Europe and the UK in the next 18 months, with declining steel prices and reduced production volumes," Moody's lead analyst for Tata Steel Ivan Palacios said.
Tata Steel's rating is two notches higher than the rating of its UK subsidiary, reflecting its stronger business and financial risk profiles, primarily as a result of the sound profitability of the group's Indian operations.
The rating outlook could return to stable in the event of a stabilisation of the steel market conditions or if there was a commensurate move in Tata Steel UK's outlook.
Tata Steel UK recently announced its decision to reduce its crude steel production over the next three months by up to 20 per cent.
"Moody's considers the credit profiles of Tata Steel and Tata Steel UK to be strongly linked due to the increasing level of operational integration between the two entities and the fact that Tata Steel UK accounts for a substantial proportion of Tata Steel's operations," added Palacios.
After much bargaining, Tatas acquired 21.1 per cent stake in Corus about $2.4 billion in 2007. Tata Steel UK, the subsidiary of Tata Steel, is the holding company for Corus Group and other steel operations in Europe.
"Moody's Investors Services changed Tata Steel outlook on its 'Ba 1' corporate family rating to negative from stable. This reflects change in outlook for Tata Steel UK from stable to negative and the close linkage between the credit profiles of the two entities," the rating agency said in a statement here.
"The change in outlook reflects the more challenging operating conditions now facing Tata Steel UK as a result of the likely deterioration in demand in Europe and the UK in the next 18 months, with declining steel prices and reduced production volumes," Moody's lead analyst for Tata Steel Ivan Palacios said.
Tata Steel's rating is two notches higher than the rating of its UK subsidiary, reflecting its stronger business and financial risk profiles, primarily as a result of the sound profitability of the group's Indian operations.
The rating outlook could return to stable in the event of a stabilisation of the steel market conditions or if there was a commensurate move in Tata Steel UK's outlook.
Tata Steel UK recently announced its decision to reduce its crude steel production over the next three months by up to 20 per cent.
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"Moody's considers the credit profiles of Tata Steel and Tata Steel UK to be strongly linked due to the increasing level of operational integration between the two entities and the fact that Tata Steel UK accounts for a substantial proportion of Tata Steel's operations," added Palacios.
After much bargaining, Tatas acquired 21.1 per cent stake in Corus about $2.4 billion in 2007. Tata Steel UK, the subsidiary of Tata Steel, is the holding company for Corus Group and other steel operations in Europe.
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