S&P: Tata Power on watch

Standard & Poor's said it placed its BB+ long-term foreign and local currency corporate credit ratings on Tata Power Co. Ltd. on CreditWatch with negative implications, reflecting significantly greater concerns on the company's rising debt and on its exposure to higher project completion, stabilization and counterparty risks.

The agency said that in October 2006, the outlook on the ratings was revised to negative from stable following the company's announcement of its Indian rupee 22 billion investment plan and its intention to proceed with the INR40 billion, 1,000 megawatt Maithon power project in eastern India.

According to S&P, in April, Tata Power announced the acquisition of Coastal Gujarat Power Ltd., a special purpose entity formed for financing and executing the INR170 billion, 4,000 MW Mundra power project in Western India and the company also announced the finalization of agreements to acquire 30% equity in two Indonesian coal producers, PT Kaltim Prima Coal and PT Arutmin Indonesia and related trading companies owned by PT Bumi Resources Tbk., for about $1.1 billion.

The agency said that it considers that these outlays would likely result in a significant increase in Tata Power's consolidated debt, in comparison with its existing operating cash flows, which will lead to a possible lowering on its ratings.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.