Fitch rates Tata Steel's Rs3,000 crore NCD issue `low-risk'
12 May 2009
Global rating agency Fitch Ratings has assigned a very low default risk to Tata Steel's Rs3,000 crore non-convertible debenture (NCD) issue. Tata Steel had, in fact, increased the issue size from the Rs2,000 crore initially proposed, the agency noted.
"Fitch Ratings today assigned Tata Steel Limited's INR 30 billion (Rs3,000 crore) NCD programme a national long-term rating of 'AA(ind)'," Fitch said in a statement.
'AA (ind)' denotes very low default risk compared to other similar issuers or obligations in India.
"The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations," as per Fitch's definitions of national credit ratings.
Fitch has also affirmed Tata Steel's national long-term rating 'AA(ind)' with a negative outlook.
Fitch, however, said the rating outlook indicates the direction a grade is likely to move over one to two years.
"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.
Tata Steel's consolidated net debt on account of this transaction is expected to remain unchanged, Fitch said.