S&P rates Tata Motors bonds BB+

Standard & Poor's said it assigned its BB+ issue rating to the proposed $490 million zero-coupon convertible bonds of Tata Motors Ltd., rated BB+ with stable outlook.

The bonds represent a direct, unsecured and unsubordinated obligation of the company. Proceeds will be used for capital expenditure, overseas investments, acquisitions and other general corporate purposes.

The rating factors in the company's moderate approach to the Rs.114 billion capital expenditure plans for the next four years, the agency said.

S&P said it expects some weakening in Tata Motor's profitability and cash flow protection measures due to higher borrowings for its capital expenditure plan. Nonetheless, the company's financial profile is expected to remain consistent with its current rating, the agency added.

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