International credit ratings agency Fitch Ratings has affirmed the long-term rating of India-based Tata Steel at BB+ and that of its subsidiary Tata Steel UK Holdings at B+, lifting the outlook for both companies to stable from negative.
Fitch stated that the outlook revision reflects its expectations of improvement in Tata Steel's financial profile in the near to medium term. Fitch expects Tata Steel's strong cash generation to support deleveraging over the medium term, even though debt levels are likely to peak in the financial year 2014-15 as the company expands its capacity in India.
Regarding the European operations, Fitch's expectation of a sustained improvement in Tata Steel UK Holdings' profitability is underpinned by the modest improvement in market conditions for western European steel producers and Tata Steel UK Holdings' ongoing cost rationalization measures and improving product mix.