The international credit ratings agency Moody's has announced that it has downgraded the corporate family rating of Tata Steel UK Holdings Limited to B3 from B2, confirming the outlook as negative.
Meanwhile, the ratings agency has changed the outlook of India-based Tata Steel Limited to negative from stable.
Moody's stated that the downgrade of Tata Steel UK's ratings reflects the expectation of further weakness in the operating environment facing the European steel industry, adding that the depressed economic environment in the region is likely to cause slower recovery in the company's operating and financial profile.
The worsening credit profile of Tata Steel UK has prompted a downward revision in its parent company Tata Steel Limited's outlook, since it is a very important subsidiary of the Indian steel giant. "Tata Steel UK has more than 50 percent of the group's overall steel production capacity, and its weakened financial performance weighs heavily on the consolidated group," the agency said.