S&P Boosts Tata Steel Ratings, Keeps Outlook Stable on Debt Cut
(Bloomberg) -- 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.
©2021 Bloomberg L.P.