This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
Tata Steel was upgraded to an investment grade rating of Baa3 from Ba1 by Moody’s, reflecting its expectation of continued strength in the steelmaker’s credit profile due to its “solid market position in India”. The rating action also reflects Tata Steel’s “considerable deleveraging through gross debt reduction” and expectations of “conservative financial policies”. Its profitability is set to rise despite softer steel prices. The company recently announced setting up a three mtpa electric arc furnace (EAF) in the UK at a cost of £1.25bn and is also working on the closure of a blast furnace. The EAF is expected to transform its cost position in the UK and the furnace closure is a credit positive. While Tata Steel’s EBITDA and cash flows from operations declined by 50-60% in fiscal year 2023, Moody’s notes that gross debt levels have only climbed by 10%. They also expect its free cash flows to continue being sizeable despite large capital expenditures, thereby enabling debt reduction. Tata Steel’s liquidity position is also adequate with ~$2.3bn in cash and liquid investments as of end-June 2023 and $2.25bn in undrawn term loan and working capital credit lines. The latest rating action to become a rising star, adds to S&P’s IG-rating for the company which stands at BBB-. Meanwhile it is still rated at BB+ by Fitch.
Tata Steel’s dollar bonds were trading steady – it 5.45% 2028s are at 97.74, yielding 6.05%.