Fitch cuts Tata Chemicals to junk

Fitch Ratings said it downgraded Tata Chemicals Ltd.'s long-term foreign-currency issuer default rating to BB+ from BBB- and its national long-term rating to AA(ind) from AA+(ind).

The ratings were removed from Rating Watch negative, and the outlook is negative.

The downgrade follows Fitch's re-assessment of the Tata group's ability to provide support to Tata Chemicals. The agency noted the sharp drop in valuations of key listed and unlisted entities within the group, which - in Fitch's view - limits its financial flexibility to provide support to all group companies. Therefore, Fitch has now taken a stand-alone view of Tata Chemicals and withdrawn the one-notch benefit that it had previously assigned on account of potential support from the group.

The ratings continue to be supported by Tata Chemicals' established business position as the second-largest soda ash producer in the world, its diversified customer base, multiple income streams, low demand risk in the fertilizer business and continuation of government support to the fertilizer industry.

The agency said the negative outlook reflects concerns arising from the global economic slowdown, which has impacted the two largest end-user segments for soda ash: real estate and automotives.

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