S&P rates Tata Motors notes BB

Standard & Poor’s said it assigned a BB long-term issue rating to a proposed issue of unsecured notes by Tata Motors Ltd.

The proceeds will be used to refinance a part of its debt and fund its capital expenditure, the agency said.

The rating on the unsecured notes is equalized with the corporate credit rating on Tata Motors.

S&P said it doesn’t notch the issue rating in India for priority liabilities.

The good operating performance of Tata Motors’ fully owned subsidiary, Jaguar Land Rover Automotive plc, could improve Tata Motors’ consolidated financial strength, the agency said.

Conversely, a weaker operating performance of Jaguar Land Rover could lower Tata Motors’ ratio of funds from operations-to-debt to about 30% compared with 37% in fiscal 2014, S&P said.

The ratings also reflect the company’s small size and narrow product suite compared with many global peers, the agency said, and its high capital expenditure.

Jaguar Land Rover’s established and improving market position in the global premium automotive segment and its strong operating performance temper these weaknesses, S&P added.

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