Global credit rating agency, Standard & Poor’s Ratings Services has lowered Tata Power’s credit ratings, citing weak cash flows due to partial recovery of fuel costs at its Mundra plant and lower returns on investments in Indonesian coal companies. The long-term corporate credit rating of the company has been cut to ‘B+’ from ‘BB-‘ with a negative outlook.
The issue rating on the company’s outstanding senior unsecured notes due 2017 has been lowered to ‘B+’ from ‘BB-‘. The rating agency stated that Central Electricity Regulatory Commission’s order for a full pass-through of fuel costs at the Mundra project is likely to improve Tata Power’s cash flows.
Further, the agency added that it may lower the rating if the company’s liquidity weakens further or if the company faces difficulty in refinancing its debt maturities in a timely manner.
