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Fitch Downgrades Ratings of JSW Steel & Tata Steel with Negative Outlook

Steel News - Published on Tue, 26 May 2020

Image Source: JSW Steel Tata Steel
Fitch Ratings has downgraded the Issuer Default Ratings of two Indian steel companies JSW Steel Limited and Tata Steel Limited (to 'BB-' from 'BB' after completing a portfolio review. Fitch has also downgraded Tata Steel UK Holdings Limited's Long-Term IDR to 'B-' from 'B'. The Outlook is Negative. The agency has also downgraded JSWS's and TSL's senior unsecured rating to 'BB-' from 'BB'. Simultaneously, Fitch is withdrawing TSUKH's Long-Term IDR because TSUKH is no longer issuing debt and there is no Fitch-rated debt outstanding following refinancing by TSL for its European operations in January 2020. A full list of rating actions can be found below.

Fitch said “The portfolio review follows our expectation of a decline in steel demand in India for the year ending March 2021 (FY21), compared with our earlier assumption of a mid-single-digit volume increase, due to the economic impact of the coronavirus pandemic. The Indian Steel Association has forecast an 8% drop in domestic demand in FY21, and we assume standalone sales volume for JSWS and TSL will decline by 6%. We also expect a lower EBITDA margin in FY21 due to the volume drop and weaker steel prices. We assume volume and margins will increase significantly in FY22 from a weak base, supported by a broader economic recovery.”

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Posted By : Yogender Pancholi on Tue, 26 May 2020
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