Moody's lowers Tata Steel UK

Moody's Investors Service said it has downgraded the corporate family rating and the senior secured rating of Tata Steel UK by one notch to B1 and placed the ratings under review for possible downgrade.

The rating action reflects an abrupt deterioration in the operating environment in the steel industry over the course of late 2008 taking into consideration also the measures announced by the company to mitigate the slow down in demand, including the decision to reduce the production of liquid steel by circa 30% until March 2009, as well as to initiate additional cost saving measures, the agency said.

These developments are likely to undermine the underlying profile of the group in the medium term resulting in Moody's stating that it no longer believes that the company will be achieving the credit metrics assumed at the time when the original rating was assigned.

Moody's noted that the B1 ratings are supported by the expectation of uninterrupted backing by the parent, as well as continuous proactive liquidity and covenant compliance management by the issuer.

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