Tata Motors' credit rating may be lowered because of cash concerns at the Indian automaker's Jaguar and Land Rover brands, Standard & Poor's said today.
"We will review Tata Motors' debt and funding plans in the next few days and believe there is a high likelihood that we will lower the rating further, possibly by more than one notch," S&P said in a statement.
Standard & Poor's said Tata has high debt, including a big proportion of short-term debt. "We expect the ratings to remain on Credit Watch until Tata Motors has refinanced the remaining $2 billion of a bridge facility, which is due on June 2, 2009," the agency said.
Standard & Poor's credit analyst Manuel Guerena said the operating environment continues to be extremely adverse for Jaguar Land Rover and, to a decreasing extent, Tata Motors' India operations.
Standard & Poor's said today it has kept its 'BB-' issue ratings -- three levels below the lowest investment grade -- on the company's senior unsecured notes on CreditWatch with negative implications.
"We have kept the ratings on CreditWatch pending clarification of the company's strategy to minimize the deterioration of its cash flow, its funding plans for significant capital expenditure; and its future debt composition," the agency said.
"We believe Tata Motors' cash flows -- particularly from Jaguar and Land Rover and related metrics may materially deteriorate on a consolidated basis," the statement added.
Tata Motors completed its $2.3 billion (about €1.5 billion) acquisition of Jaguar and Land Rover from Ford Motor Co. on June 2.
