Fitch Ratings has upgraded Indian steelmaker Tata Steel Limited’s Issuer Default Rating (IDR) from ‘BB+’ to ‘BBB-’, maintaining a stable outlook, a statement from the rating agency said on Tuesday, October 10.
Additionally, the rating agency has upgraded the rating of $1 billion notes due in July 2024, which were issued by Tata Steel Limited’s subsidiary, ABJA Investment Co. Pte. Ltd., and guaranteed by its parent, from 'BB+' to 'BBB-'.
Tata Steel’s strategic shift towards replacing blast furnaces with more cost-effective and environmentally-friendly electric arc furnace (EAF)-based steelmaking capacity is expected to enhance the cost competitiveness of its UK operations, the rating agency noted.
According to Fitch, "Tata Steel Limited’s plan to install EAF-based steelmaking capacity of 3 million mt per year at Port Talbot, UK, within the next three-four years should allow the UK business to generate a profit even during industry downturns, instead of being a drag on TSL's financial performance."
The rating agency said that Tata Steel Limited’s Indian operations secure nearly all of their iron ore needs and 22 percent of their coal requirements through the company's mines, and its plants in Kalinganagar and Jamshedpur are among the lowest-cost assets in the world.
