S&P Boosts Tata Steel Ratings, Keeps Outlook Stable on Debt Cut
Expansion plans of large steel producers, such as Tata Steel Ltd. and JSW Steel Ltd., could bolster the overall capacity addition by 30 million tonnes, according to Crisil. (Photographer: Jeff Kowalsky/Bloomberg)

S&P Boosts Tata Steel Ratings, Keeps Outlook Stable on Debt Cut

Tata Steel Ltd. is on track to slash part of its $15 billion debt in the next two years helped by higher prices and strong cash flows, leading to a ratings upgrade, according to S&P Global Ratings.

Tata Steel’s debt will drop by about 30% by 2023 from about 1.1 trillion rupees ($15 billion) as of March 2020, with around half of this decline expected to have happened by last month, S&P said in a statement. It upgraded the steel mill’s long-term ratings to BB- from B+ and maintained the outlook at stable.

“The stable outlook reflects our expectation that Tata Steel will significantly reduce debt over the next 12-24 months, supported by strong operational cash flow,” S&P said. It also reflects expectations that the company’s debt reduction will result in lower volatility in its credit metrics compared with the previous steel cycle, with greater resilience during downturns, the ratings companysaid.

The base case shows that the company’s free operating cash flows will be adequate to cut debt even with higher capital expenditure estimates of about 90 billion rupees per year, S&P said, adding that Tata Steel will moderate its investment plans, if required, to meet this objective.

Read More
  • Steel Mills in India Set to Slash Debt as Demand Rebounds
  • Tata Steel Posts Best Profit Since 2019 as Demand Revives
  • Tata Steel Outlook to Stable by Moody’s; L-T CFR Rating Affirmed
  • JSW Steel Outlook to Stable by Moody’s; L-T CFR Rating Affirmed

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