Indian steel major Tata Steel Limited (TSL) has been upgraded to BB from BB- with a stable outlook by Fitch Ratings. The rating agency has also raised the rating of its $1bn 5.95% 2024s issued through TSL’s subsidiary, ABJA Investments to BB from BB- while assigning a recovery rating of RR4 to the debt. TSL posted robust earnings for FY2021 supported by the rise in global commodity prices. The company’s sales volumes saw a sharp recovery supported by higher exports after pandemic-related lockdowns in 1Q2021. The consolidated reported EBITDA rose over 70% in FY21 driven by stronger margins. The EBITDA for the European operations was also positive at £125mn ($235mn) for Q4 ended March after incurring losses in first three quarters of FY2021 as well as in FY2020. The rating agency factored in the possible lower domestic demand due to the resurgence of Covid-19 in India. However it expects only a limited impact in 1H2022. Tata Steel also benefits from the support of the Tata Group conglomerate, which has leading businesses in technology and autos among others. The steel major had announced its 4Q earnings on May 5 in which it has reported highest ever consolidated quarterly EBITDA and a reduction in net debt by INR 294bn ($4bn).
Tata Steel’s 4.95% 2023s and 5.95% 2024s were up 0.02 and 0.06 to trade at 103.6 and 108.8, yielding 3.04% and 3.02% respectively on the secondary markets.
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