ICRA downgrades Tata Motors Finance rating

Credit rating agency ICRA has revised the short term rating assigned to the Rs 35 billion short-term debt programme of Tata Motors Finance Limited (TMFL) from A1+ to A1 (pronounced A One).

ICRA has also assigned the rating of A1 to the enhanced Short term Fund based limits of Rs 7.85 billion (enhanced from Rs 5.65 billion) and Rs 10.50 billion Short term loans of TMFL. This is the highest credit quality rating assigned by ICRA to short-term debt instruments. Instruments rated in this category carry the lowest credit risk in the short term.

Within this category, certain instruments are assigned the rating of A1+ to reflect their relatively stronger credit quality. The revision of TMFL’s rating follows ICRA’s decision to revise the Short term rating assigned to TMFL’s parent ‘Tata Motors Limited’ (TML) from A1+ to A1, said the agency in a release.

ICRA has also assigned the LA+ (pronounced L A plus) rating to the enhanced Long Term fund based limits of Rs. 37.38 billion (enhanced from Rs 28.58 billion) and enhanced Long Term Non fund based limits of Rs. 2015 billion (enhanced from 10.15 billion) of TMFL.

The rating indicates adequate credit quality. TMFL’s ratings primarily reflect its parentage (the company is owned 100% by TML) and its strategic importance for the parent TML (rated LA+ and A1 by ICRA), which ICRA views as key factors to ensure continuity of support and protection to debt holders of TMFL. However any reduction in the expected support from the parent and TMFL’s inability to improve its asset quality would warrant a review of the rating.