S&P maintains watch on Tata Steel

Standard & Poor's said it maintained the CreditWatch with negative implications on its BBB long-term corporate credit ratings on Tata Steel Ltd., along with the BBB foreign-currency rating on Tata Steel's senior unsecured bank loans of $750 million and $500 million.

This action follows the U.K. Takeover Panel's announcement on the completion of the auction procedure between Tata Steel and Companhia Siderurgica Nacional (BB/watch negative) for the takeover of U.K.-based steelmaker Corus Group plc (BB/watch developing/B).

The size of the acquisition and the potential cash outflow in Tata Steel's offer for Corus could have an adverse impact on its financial risk profile, S&P said. In addition, the agency said that the company could face challenges related to the integration and improvement of Corus' comparatively weaker business profile.

A successful acquisition, however, can potentially improve the business profile of the merged entity by giving the company access to new product and market segments and prominence in the rapidly consolidating global steel industry, the agency added. In resolving the CreditWatch placement, S&P said it will seek further information on the long-term means of financing adopted by Tata Steel.

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