Standard & Poor (S&P) rating agency has assigned a recovery rating of '1' to the £3.53 billion senior secured bank loan due 2015-2017 issued by Tata Steel UK Holdings Ltd. (TSUKH) According to S&P this indicates expectation of high (90%-100%) recovery in the event of a payment default.
The loan was issued through Tata subsidiaries Tata Steel Netherlands Holdings BV and Tata Steel Nederland BV.
"Under our criteria (see "Related Research" at the end of this report), a '1' recovery rating leads us to rate the bank loan at 'BB', two notches above the long-term corporate credit rating of 'B+'. Recovery expectations are at the higher end of the range," said S&P in a release.
Recovery prospects are largely based on a stand-alone assessment of TSUKH, and do not factor in any potential support from the higher-rated parent company (BB-/Stable/--) to directly meet debt servicing requirements.
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