Tata Steel Ltd.’s (TSL) long-term issuer default rating was upgraded to investment grade by Fitch Ratings with a stable outlook, following less uncertainty and financial risk from its UK operations.
The cost competitiveness of Tata’s UK operations should improve following the Mumbai-based company’s plans to replace its UK blast furnaces with more efficient and environmentally friendly electric arc furnace capacity, Fitch said Monday. It upgraded the issuer default rating to BBB - from BB+.
"The UK assets are currently a weak link in TSL's portfolio in terms of cost position, with a reported EBITDA loss of around GBP 130 million in the financial year ended March 2023 (FY23). TSL's plan to install EAF-based steelmaking capacity of three million tonnes per annum (mtpa) at Port Talbot, UK, within the next three-four years should allow the UK business to generate a profit even during industry downturns, instead of being a drag on TSL's financial performance," it said in a statement.
Fitch also raised the rating on Tata’s $1 billion notes due July 2024 issued by unit ABJA Investment Co. to BBB- from BB+. Last month, Moody’s Investors Service upgraded Tata Steel’s long-term rating with a stable outlook on expectation of an improvement in profits and its debt reduction efforts.
The Tata Group owns a 34% stake in TSL.
(Edited by : Sangam Singh)
First Published: Oct 9, 2023 5:49 PM IST
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