Moodys downgrade ratings of Tata Motors

Moody’s Corporation, on Thursday, revised the ratings for Tata Motors Limited (TML) and Jaguar Land Rover Automotive Plc (JLR). The existing rating for senior unsecured instruments is Ba3 (under review) which has been downgraded to B1 (negative). The slide in the rating reflects sustained deterioration in its credit profile. The company was expected to return to the level of Ba3 but the company is taking longer than what was expected.

The credit profile of Tata Motors was already under stress due to lower auto sales and falling demand in key markets even before Coronavirus outbreak. The pandemic has added to the already stressed cash flows, which resulted in weak credit metric.

Tata Motors operations include manufacturing hundred per cent owned premium car Jaguar Land Rover Automotive Plc (JLR) (B1 negative), commercial vehicles (CV) and passenger vehicles (PV) businesses in India. The rating reflects the challenges faced by TML India from weakened auto sector sales, economic slowdown and weak liquidity.

The rating outlook could return to stable if TML’s outlook on JLR is stable and TML India’s operations improve significantly.

The pandemic is negatively affecting the global economic activities. The global automotive sector is one of the many sectors, which have been severely affected by COVID-19 outbreak.