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| Fitch assigns Tata Steel's Rs 3,000 cr NCD very low risk |
| Press Trust of India / New Delhi May 12, 2009, 15:09 IST |
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Ratings agency Fitch today assigned very low default risk to Tata Steel's Rs 3,000 crore non-convertible debenture programme, relative to other issuers or obligations in India.
"Fitch Ratings has today assigned Tata Steel Limited's INR 30 billion (Rs 3,000 crore) NCD programme a national long-term rating of 'AA(ind)'," the global credit rating agency said in a statement.
The amount was increased from Rs 2,000 crore initially proposed, the agency said.
Though the rating is not internationally comparable, 'AA' with an additional country identifier of '(ind)' for India denotes very low default risk relative to other issuers or obligations in India.
"The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations," according to Fitch Ratings' definitions of national credit ratings.
Fitch has also affirmed Tata Steel's national long-term rating at 'AA(ind)' with a negative outlook.
A rating outlook indicates the direction a grade is likely to move over one to two years. However, a positive or negative rating outlook does not imply that a rating change is inevitable, Fitch says.
"The proceeds of the NCD, along with the existing cash balances available with Tata Steel, would be partly used to meet additional equity infusion into Tata Steel UK (TSUK) and partly prepay some of its debt obligations in Tata Steel," Fitch said.
Further, the agency said that the equity infused in TSUK will be used to prepay some of the debt obligations at the unit.
"The consolidated net debt on account of this transaction is expected to remain unchanged," it said.
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