NEW DELHI: Ratings firms Moody’s Investor Services on Wednesday upgraded the ratings of Tata Steel and revised its outlook for JSW Steel to positive from stable, noting that both companies have seen an improvement in their credit profiles.
“Moody’s Investors Service has upgraded Tata Steel’s CFR to Ba2 from Ba3. The outlook has been changed to stable from positive,” Moody’s said in its statement on the Tata firm. It also affirmed JSW Steel’s Ba2 corporate family rating (CFR) and the Ba2 rating on the company’s senior unsecured notes.
Moody’s corporate family ratings (CFRs) are its opinions on a group’s ability to honour all of its financial obligations.
On Tata Steel, Moody’s said that during April-December of 2017-18 financial year, its Indian operations generated EBITDA per tonne of `17,270, more than three times the profitability of its European operations. Consequently, strong growth prospects in India augur well for Tata Steel. “India accounts for 57 per cent of its global steel volumes sold, 54 per cent of consolidated revenues, and 85 per cent of consolidated EBITDA”.
On JSW Steel, Moody’s vice president Kaustubh Chaubal said the positive outlook reflects the improving trajectory of the company’s credit metrics mainly due to its competitive and efficient production costs, solid domestic demand conditions and Moody’s expectation for a supportive ongoing price environment.
“The positive outlook also incorporates our expectation that the company will remain selective in any acquisitions, funding them with a prudent mix of debt and equity. We expect that any such acquisitions will be earnings accretive and help in rapid deleveraging, leading to at most only a temporary spike in adjusted debt/EBITDA leverage,” said Chaubal.
Yes Bank outlook now stable
Moody’s Investors Service on Wednesday affirmed its Ba1 rating to Yes Bank but changed the outlook to stable from negative, noting that this is taking into account recent developments including the results of the Reserve Bank of India’s (RBI) risk assessment report and stable financial performance. On February 13, 2019, Yes Bank announced that the RBI found no divergence in the bank’s asset classification and provisioning. However, the RBI warned it of regulatory action for disclosure of the report.