No change in rating on Tata Motors offering: Moody's

NEW DELHI: The issuance of fresh share and convertible bonds by Tata Motors to the tune 4 750 mn has no immediate impact on the rating and outlook of the country's leading automaker, global credit rating agency Moody's said today.

However, the agency said, "positive momentum on the rating could build up over the near to medium term" if Tata Motors continues to deleverage its balance sheet while improving its performance both in India and at Jaguar Land Rover (JLR).

The comment follows TML's announcement that it has raised USD 750 million through issue of fresh shares in the international market and foreign currency convertible notes.

The proceeds are expected to be used to repay the debt incurred in connection with the acquisition of JLR, which stands at USD 700 million, and for other purposes like capital expenditure, working capital and other general corporate purposes.

"The announced capital raising is certainly a positive for TML as it will allow the company to reduce leverage, albeit not significantly, and improve its liquidity profile," said Ivan Palacios, a Moody's analyst.

"However, there has been no immediate positive impact on TML's rating given that its leverage levels remain high," Palacios said.

The agency has a 'B3 corporate family rating', a low investment grade rating for the auto giant with a 'stable' outlook. The corporate family ratings are based on a corporate family's ability to honour all of its financial obligations.