S&P Ratings upgraded Tata Steel and its subsidiary Abja to BB- from B+ with a stable outlook. The rating agency cited operating momentum led deleveraging as primary factors for the rating action. S&P expects adjusted debt levels to fall ~30% by March 2023 from ~$15bn with half of the decline to be delivered in the year ended March 2021. Tata Steel has committed to reducing absolute debt levels by at least $1bn per year from fiscal 2022. With working capital improvements, a recent equity raise and stronger cash flow generation, S&P cites that Tata Steel has already seen sizeable debt reduction in fiscal 2021. The stable outlook reflected expectations that they would significantly reduce debt over the next 12-24 months and that the debt reduction would result in lower volatility in its credit metrics. The rating action by S&P comes after Moody’s upgraded its outlook on the company to stable last week. Tata Steel reported a record quarterly EBITDA end-2020 at $1.2bn, up 46% QoQ.

Tata Steel’s bonds issued by Abja were flat – its 5.45% 2028 was at 103.56, yielding 4.8%.

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