& Poor''s said today that it had assigned its ''BB-'' long-term and ''B'' short-term
corporate credit ratings to the UK-based steel producer Tata Steel UK Ltd (TSUK),
the new intermediate parent holding company of UK-based steel manufacturer Corus
Group PLC and wholly owned subsidiary of Tata Steel
Ltd. (BB/Positive/--) India''s second-largest integrated steel producer.
outlook is positive.
& Poor''s also assigned its ''BB'' senior secured debt rating and a recovery
rating of ''2'' to the £3.67-billion senior secured debt issued by TSUK and
subsidiaries, indicating our expectation of substantial (70 per cent - 90 per
cent) recovery in the event of a payment default.
issue rating is one notch above the corporate credit rating.
the same time, the long-term corporate credit rating on Corus Group was lowered
to ''BB-'' from ''BB'' and removed from CreditWatch with developing implications.
The outlook is stable. The short-term corporate credit rating on Corus Group was
affirmed at ''B'' and removed from CreditWatch with positive implications.
ratings were initially placed on CreditWatch on Oct. 18, 2006. The lowering of
the long-term rating reflects Corus Group''s much higher leverage following the
completion of its takeover by Tata Steel.
senior unsecured debt ratings on Corus Group''s €800 million 7.5% bonds due
2011 and Corus Finance PLC''s £200 million 6.75 per cent guaranteed bonds
due 2008 have been lowered to ''B+'' from ''BB-'' and removed from CreditWatch with
one-notch downgrade maintains the existing one-notch differential with the corporate
credit rating, reflecting structural subordination.
positive outlook on TSUK reflects the likelihood of a one-notch upgrade should
Tata Steel complete its planned longer term financing including proposed hybrid
securities and new equity," said Standard & Poor''s credit analyst Alex
would signal stronger evidence of Tata Steel''s ability to provide financial support
to TSUK in a potential distress situation. Separately, we expect TSUK to continue
to benefit from favorable steel prices and to improve its business profile.
do not, however, expect material enhancements to its operations, despite new ownership
by Tata Steel, which will limit further upside potential," Herbert added.
"In addition, much higher leverage will act as a constraining factor in coming
ratio of FFO to adjusted debt of 20 per cent-25 per cent over the cycle is in
line with the rating. Downside risk could develop if the steel market should markedly
stable outlook on Corus Group reflects our expectation that the outstanding bonds
will be repaid from drawings under TSUK''s new senior secured bank facilities,
which is likely in the coming months. We then expect to withdraw all ratings on
Corus Group," he said.