Rating agency Standard & Poor’s (S&P) today downgraded steel major Tata Steel to ‘BB-‘, a low investment grade rating, over persistent subdued operating performance amid subdued demand and low steel prices.
The agency lowered its long-term corporate credit rating on Tata Steel to ‘BB-‘ from ‘BB’, adding that the outlook for the Mumbai-based firm is stable.
S&P also lowered its long-term corporate credit rating on Tata Steel UK Holdings to ‘B+’ from ‘BB-‘ but maintained a stable outlook on the firm struggling with high debt and lower sales. The rating on Tata Steel UK has been lowered following the downgrade of its parent Tata Steel, the agency said.
“We downgraded Tata Steel because we expect the company’s weak cash flows and compressed profitability to keep its leverage high over the next 12-18 months,” S&P Credit Analyst Vishal Kulkarni said in a statement.
The ratings agency lowered its assessment of the firm’s financial risk profile to highly leveraged from aggressive to reflect its weakened cash flow leverage ratios, he added.
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