The Hindu Business Line : S&P keeps Tata Steel rating on CreditWatch

Standard & Poor's kept its BBB long-term corporate credit rating on Tata Steel on CreditWatch with negative implications, following its revised bid for acquisition of Anglo-Dutch steel maker Corus, as part of the bidding war with Brazil's CSN.

The ratings on Tata Steel were initially placed on CreditWatch with negative implications on October 18, following the announcement of its initial bid of 455 pence-a-share for Corus. On December 10, the company upped its offer to 500 pence-a-share, following which its rival, CSN, announced a bigger bid of 515 pence a share.

"Although it remains unclear whether the bidding will continue, Tata Steel evidently intends to finance the difference between its latest and initial bid with additional debt, potentially resulting in further downward pressure on the ratings compared with the original offer," according to Mr Anshukant Taneja, S&P's credit analyst.

The size of the acquisition and the potential cash outflow, represented by Tata Steel's latest or future offers for Corus, could have an adverse impact on its financial risk profile. A successful acquisition, however, could potentially improve the business profile of the merged entity, a S&P note said.

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