Moody's up rating outlook on Tata Motors to 'stable'

NEW DELHI: Global credit rating agency Moody's on Tuesday revised upwards outlook for its low investment grade rating on Tata Motors from negative to stable in wake of country's leading automaker successfully refinancing its bridge loan for Jaguar and Land Rover acquisition.

"The change in outlook to stable reflects the completion of the refinancing of the maturing $2 billion bridge loan, originally raised in June 2008 for TML's acquisition of Jaguar Land Rover," the rating agency said in a statement today.

The loan facility was taken up by Tata Motors with a scheduled maturity in June 2009.

The outlook has been revised on Moody's 'B3 corporate family rating', a low investment grade rating, for Tata Motors. The corporate family ratings are based on a corporate family's ability to honour all of its financial obligations.

The successful refinancing, the agency said, speaks of the company's strong support from the domestic banking sector during the challenging times of credit markets.

Tata Motors had refinanced the bridge loan through issuing Rs 4,200 crore secured non-convertible rupee debentures and others prepayment through fixed deposits scheme and rollover of some balance.

However, the agency pointed out that the capital structure of the company still is highly geared and has a high proportion of short-term debt.