Fitch lowers Tata Steel, puts on evolving watch

Fitch Ratings said it downgraded Tata Steel Ltd.’s long-term foreign-currency issuer default rating to BB from BB+ and placed it on Rating Watch evolving.

The company’s unsecured notes also were downgraded to BB from BB+ and placed on evolving watch.

The agency also said it downgraded the long-term foreign-currency issuer default rating for Tata Steel’s wholly owned subsidiary Tata Steel UK Holdings Ltd. to B from B+ and placed it on evolving watch.

The downgrades reflect the decline in the company’s profitability and jump in leverage during the financial year ending March 31, Fitch said, following challenging market conditions for its operations in India and overseas, especially in the United Kingdom, Fitch said.

The evolving watch reflects uncertainty following news that the company is exploring all options for portfolio restructuring in Europe, including the potential divestment of its U.K. operations, the agency said.

A disposal of those operations, in part or in whole, will result in a change to the company’s ratings, Fitch added.

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