Singapore, July 27, 2020 -- Moody's Investors Service has assigned a Baa3 senior unsecured rating
to the proposed notes to be issued by TML Holdings Pte Limited,
a wholly-owned subsidiary of Tata Motors Limited (B1 negative).
The assigned Baa3 rating is under review for downgrade.
The notes are supported by an irrevocable standby letter of credit (SBLC)
from Bank of Baroda, London Branch (the LC Bank). Moody's
has a Baa3(cr) long-term Counterparty Risk (CR) Assessment on Bank
of Baroda (Baa3, rating under review for downgrade).
Issuer: TML Holdings Pte Limited
- GBP98 million 4.0 percent credit enhanced notes due
2023, assigned Baa3, placed on review for downgrade
RATINGS RATIONALE
The notes' Baa3 rating is based on Bank of Baroda's CR Assessment,
with the review for downgrade reflecting the review for downgrade on Bank
of Baroda's ratings. The notes are fully supported by an
irrevocable British pound-denominated SBLC, which is an unsecured
and unsubordinated obligation of the LC bank.
The payment obligations of the LC bank under the SBLC will at all times
rank pari passu with all of its other present and future unsecured and
unsubordinated obligations.
Moody's notes that the SBLC covers up to GBP100 million,
which is comprised of the face value of the proposed notes (GBP98
million) and interest payments up to 186 days. As such, any
demand against the SBLC can be raised for an amount that is the lower
of: (1) GBP100 million; or (2) the total outstanding principal
amount plus any interest to be accrued and other unpaid fees.
The absence of an interest reserve account and the limited cushion in
the SBLC face value (namely, GBP2 million which is the difference
between the SBLC face value and the face value of the proposed notes)
expose noteholders to potential recovery risks in the event of a default
triggered by non-payment of interest.
The issuer may from time to time create and issue further notes provided
that certain conditions have been met, including ensuring that such
notes are supported by an irrevocable letter of credit issued by the LC
bank. The terms of the irrevocable letter of credit of the new
notes have to be substantially similar to those of the SBLC.
Moody's analysis of the transaction is based primarily on the assessment
of Bank of Baroda's unsecured and unsubordinated obligations and
its ability to support the payment of the notes through the SBLC from
the LC bank.
Citicorp International Limited is the trustee, Citibank N.A.
(London branch) is the principal paying and transfer agent, and
Citigroup Global Markets Europe AG is the registrar.
Bank of Baroda is a public-sector commercial bank that provides
retail, corporate and wholesale banking services, as well
as treasury facilities to individuals, medium-sized and large
companies, institutions, provident fund trusts, and
central and state governments. Operating mainly in India,
the bank serves around 131 million customers. The Government of
India (Baa3 negative) owns a 71.6% stake in Bank of Baroda.
Following its merger with Dena Bank and Vijaya Bank on 1 April 2019,
Bank of Baroda had a deposit market share of 6.8% as of
31 December 2019. After the merger, the bank had a combined
network of 9,470 domestic branches and a global presence across
100 overseas offices spanning 21 countries, including one International
Banking Unit at GIFT City (SEZ) in Gandhinagar, Gujarat, India,
as of the end of December 2019.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Any change to the long-term CR Assessment of Bank of Baroda could
lead to a corresponding change in the rating of the notes.
The principal methodology used in this rating was Rating Transactions
Based on the Credit Substitution Approach: Letter of Credit-backed,
Insured and Guaranteed Debts published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1068154.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
This rating is solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Kaustubh Chaubal
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Ian Lewis
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
