Credit rating agency Standard & Poor today said that it has kept its 'BB' corporate credit rating on the country's largest vehicle manufacturer Tata Motors on creditwatch with negative implications, pending finalisation of the long-term financing plans for funding the company's purchase of Jaguar and Land Rover (JLR) from Ford Motor Company. The rating on Tata Motors by S&P was lowered to 'BB', from 'BB+', in April, after the announcement of the agreement with Ford Motor Company for the purchase of JLR. Tata Motors has paid about $2.3 billion in cash for JLR (comprising brands, plants, and intellectual property rights).

The company has obtained a board approval to raise up to $1.05 billion through a rights issue of equity shares, up to $750 million of optionally convertible preference shares, and $500 million-$600 million through a separate issuance of securities in overseas markets.The creditwatch status is expected to be resolved as greater clarity and certainty is established on
the long-term financing arrangements. The likelihood of the rating being lowered further is low assuming: the overall credit metrics remain consistent with the current rating; the bridge facility is refinanced through proposed equity inflows and long-term funds, and Tata Motors' capital expenditure commitments to its domestic operations and to JLR remain broadly at the levels given by the company.

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