Moody's Investor Service has downgraded Tata Steel 's debt rating by one leve l- from Ba1 to Ba2 - after falling prices dragged third-quarter profit down 39 per cent. The rating is two levels below investment grade.
The company remains on review for further possible downgrade, the agency said in a statement today.
Tata Steel has been hurt more by the global recession as its earnings included that Corus Group Ltd, which accounts for more than two-thirds of Tata's production.
Corus saw its output fall by 40 per cent and expects the cuts to continue until the second quarter.
Standard & Poor's also lowered its rating on Tata by one level last month, citing weak market conditions.
''The rating action reflects the deteriorating operating performance of the company, as a result of the dramatic reversal apparent in steel industry dynamics following, in turn, a sharp fall in demand and prices,'' Moody's said.
Steel prices in Europe have halved while prices in 415 euros a tonne from a high of 815 euros on June 18, while Indian prices have dropped 40 per cent.