Fitch upgrades Tata Steel

Fitch Ratings said it upgraded Tata Steel Ltd.’s issuer default rating to BB+ from BB. The agency also boosted the rating on the $1 billion notes due July 2024, issued by Tata Steel’s subsidiary, ABJA Investment Co. Pte. Ltd., and guaranteed by Tata Steel to BB+ from BB.

“The upgrade factors in a significant improvement in TSL's financial profile in the financial year ended March 2022 (FY22), driven by record EBITDA and significant debt repayment. TSL has benefitted from high steel prices, while sales volume remained largely unaffected by a resurgence of the Covid-19 pandemic in India earlier in the financial year,” Fitch said in a press release.

The agency said it forecasts the company’s total debt/EBITDA leverage receded to below 1.5x in FY22, from 3.4x in FY21, but sees it climbing back to around 2.5x by fiscal year 2024 on higher capital expenditures and lower industry margins.

The outlook is positive.

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