ΦΩΤΑΥΓΕΙΑ : planned divestment of its European steel operations under TSUKH.

Κυριακή 19 Μαΐου 2019

planned divestment of its European steel operations under TSUKH.

Moody's affirms Tata Steel’s Ba2 rating
The rating action follows Tata Steel's announcement on May 10 that it has decided against going ahead with a planned divestment of its European steel operations under TSUKH.
By
Rakhi Mazumdar, ET Bureau
Kolkata: Moody's Investors Service has affirmed Tata Steel NSE 0.04 % Ltd.'s Ba2 corporate family rating (CFR) and the B2 CFR of its wholly owned subsidiary, Tata Steel UK Holdings Limited (TSUKH). The outlooks have been maintained at stable. The stable outlook on Tata Steel reflects Moody's expectation that "the company's strong operating performance and improving credit metrics will be sustained despite the inherent cyclicality of the industry."

The rating action follows Tata Steel's announcement on May 10 that it has decided against going ahead with a planned divestment of its European steel operations under TSUKH, into a 50:50 joint venture (JV) with thyssenkrupp AG (tk).

“Tata Steel's Ba2 CFR continues to reflect the company's significant, diversified and growing operating base, its globally cost-competitive steel operations in India that are a function of its ownership of key raw materials, and its sustained track record of improving credit metrics,” a Moody’s report said.

Tata Steel Ltd.

"We view the suspension of Tata Steel's plan to divest its European steel business into a JV with tk as credit negative," says Kaustubh Chaubal, a Moody's vice president said." However, even without the divestment of the relatively weak performing European operations, Tata Steel's consolidated credit profile remains supportive of its Ba2 CFR., he added.

However, TSUKH's continuous focus on restructuring has led to improving credit metrics, in turn supporting its B2 CFR. “Specifically, TSUKH in 2016 and 2017 it divested its long products business to Greybull Capital and sold its specialty steel operations and its 42-inch and 84-inch pipe mills to Liberty House. It also resolved its long impending pension issue,” Moody’s said.

"Moreover, Moody's expects Tata Steel's Indian operations will continue to dominate the company's EBITDA and cash flow, and pave the way for its debt/EBITDA leverage to further improve to around 3.1x by March 2020 from an estimated 3.5x at March 2019," Chaubal who is also Moody's Lead Analyst for Tata Steel and TSUKH, added.

TSUKH's B2 CFR is supported by its significant steel producing capacity, diverse manufacturing operations across the UK and the Netherlands, and the sustained improvement in its operating profitability, the report said. Moody's expects TSUKH will continue to benefit from being part of Tata Steel and the broader Tata group. Support from Tata Steel is also reflected in TSUKH securing long-term refinancing for its term debt in 2014. The stable outlook on TSUKH reflects Moody's view that the improvement in the company's profitability and the resultant improving trajectory of its credit metrics will likely be sustained.