Moody’s may upgrade Tata Steel, its UK arm

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Moody’s Investors Service has put Tata Steel and Tata Steel UK Holding (TSUKH) under review for upgrade as the company has been able to make progress on refinancing its European assets and tap global markets to lock in cheaper funds.

The review for upgrade has been triggered by two bond issuances by ABJA Investment, which were guaranteed by Tata Steel, for a total consideration of $1.5 billion and by the rapid progress made on the refinancing of Tata Steel UK Holding’s senior facilities agreement, Moody’s said in a report on Monday.

“On the back of improving sentiment in Europe and India, Tata Steel has been able to make swift progress on refinancing its European assets and in opportunistically tapping global markets to lock in cheaper funds for the group,” said Alan Greene, Moody’s vice-president and senior credit officer.

Moody’s Investors Service has put Tata Steel’s corporate family rating of Ba3 and TataSteel UK Holdings’ corporate family rating of B3 under review for upgrade. The other ratings under review for upgrade are TSUKH’s probability of default rating of B3-PD, and the B3LGD 3(49 per cent) rating of TSUKH’s term loan facility, the report said.

“Tata Steel’s Ba3 rating has been held back by TSUKH’s weak performance in recent years despite its very profitable assets in India. With TSUKH on a better footing both operationally and financially, the strength of the parent can better benefit the group,” Greene, also the lead analyst for Tata Steel, said.

Tata Steel, on a standalone basis, has consistently been one of the most profitable steel companies globally.

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