Brickwork downgrades Tata Steel’s credit rating

“As part of review by Brickwork Ratings, the agency on October 27, 2016 revised Tata Steel Limited’s credit rating to BWR AA from BWR AA+ for NCD (Non-Convertible Debenture) and BWR AA- from BWR AA for the perpetual debt, with a negative outlook,” the steel producer said in a regulatory filing. 

The agency revised rating to ‘BWR AA’ with a negative outlook for the unsecured NCD issues of Rs 4,000 crore and also to ‘BWR AA-’ for the unsecured subordinated perpetual debt issues of Rs 2,500 crore of Tata Steel Ltd. 

“The sudden change of guard at the holding company/group level has not only heightened the management risk for the company, but also has exposed it to uncertainty over continuity of critical decisions on cost cutting and deleveraging the balance sheet concerning the unprofitable UK operations and restructuring its European business,” said the ratings agency.

Further, the agency said that unless the steel producer takes appropriate measures in this regard, it might lead to a further deterioration in financial profile of the company, as also a rating action. 

The steel maker had already said that financial statements of the company were prepared on a going concern basis and present a true and fair view of the state of affairs of the firm.