Jaguar Land Rover credit rating downgraded on Brexit worries

LONDON — S&P said on Wednesday it had downgraded its credit rating on Jaguar Land Rover, and its owner, even deeper into junk and put it on review for a possible further downgrade due to the growing risks of a no-deal Brexit and U.S. import tariffs.

S&P cut its rating on senior unsecured notes of Jaguar Land Rover, and its owner India’s Tata Motors, to ‘B+’ from ‘BB-‘ following JLR’s weaker than expected third-quarter results.

It said it could lower the JLR rating further, most likely by one notch, if the UK-based automaker fails to meet the base-case expectations for full-year results, Britain leaves the EU without a deal or Washington slaps new import tariffs on cars.

Fitch ratings agency also put Jaguar under review in early February.

The moves, which usually increase a company’s funding costs, highlight growing concerns about disruption to industrial groups with complex supply chains spread across the EU and beyond from Britain’s potentially chaotic departure from the bloc.

S&P said JLR’s woes are depressing profitability and causing a high cash burn rate for Tata.

The agency said it expects Tata to suffer negative cash flow for at least the next 12-18 months before its Chinese operations stabilise and cost cuts restore its financial health.

Tata Motors earlier this month denied a report that it is exploring options for Jaguar Land Rover that could include selling a stake in the automaker.

JLR posted a loss of about $4 billion in the last quarter.

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