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ICRA sets LAA rating to Tata Power proposed NCD programme.

BANKING AND CREDIT NEWS-13 July 2010-ICRA sets LAA rating to Tata Power proposed NCD programme(C)1994-2010 M2 COMMUNICATIONS

13 July 2010 - ICRA said it set an LAA rating to the planned INR6bn (USD128.3m/EUR101.8m) non-convertible debenture (NCD) programme of power utility Tata Power Company Ltd (BOM:500400), part of India's Tata Group.

This rating indicates "high credit quality". The rated instrument carries low credit risk.

The outlook on the rating is "positive".

ICRA has an outstanding rating of LAA, with a "positive" outlook, on various NCD programmes of the company amounting to INR25bn and an A1+ rating on its INR5bn short-term debt programme.

The rating reflects the stable cash accruals from the company's operations in the licensee area, the considerable progress in the execution of the green-field power projects at Mundra in Gujarat, with a 4000-MW capacity, and at Maithon in Jharkhand, with a 1050-MW capacity, as well as the comfortable financial profile. The company has strong financial flexibility, which is evident from the fund raising of about INR30bn during financial 2010, the demonstrated ability to monetise the stakes in telecom companies in the past periods as well as the recently announced stake sale in coal SPVs for about USD300m.

The ratings however continue to be constrained by the execution risks present in the ongoing green-field projects, the exposure to interest rate and foreign exchange risks especially in case of competitively bid projects and a large size of the investments plans. While the debt levels on consolidated basis are expected to increase from the current level on account of the ongoing projects of the group, the "non-recourse" nature of most of the debt on the books of the subsidiaries, the long maturity of the existing debt on own books and the company's established track record across the value chain in the power sector provide comfort from the credit perspective.

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Publication:M2 Banking & Credit News (BCN)
Date:Jul 13, 2010
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