Global credit rating agency Standard & Poor's has affirmed a rating of non-investment grade for auto major Tata Motors while removing it from credit watch. The agency has assigned the company a corporate credit rating of 'BB' (non-investment grade or junk rating) while maintaining that the outlook on the company is negative.
The negative outlook rating on Tata Motors reflects deteriorating market conditions in the US and Europe, weakening domestic market demand and increase in debt, specially short term. S&P said there was a higher working capital requirement, and slowdown in the vehicle loan securitisation market and capital expenditure, resulting in weakening the company's financial profile. The agency said the rating is currently supported by the company successfully completing its simultaneous unlinked rights issues aggregating about 800 mn dollars, the proceeds of which are to be used to partly repay a 3 billion dollar bridge loan that Tata Motors had taken for JLR acquisition.