Moody's Investors Service on Tuesday said it has placed JSW Steel's ratings under review for downgrade. The ratings outlook has been revised to under review from stable, the global ratings agency said in a statement.
"Moody's Investors Service has placed under review for downgrade JSW Steel Limited's Ba2 corporate family rating (CFR) and the Ba2 senior unsecured rating. The ratings outlook has been revised to ratings under review from stable," it said.
Moody's said it expects to conclude the review within 90 days. The agency further said the rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets.
The steel industry has been one of the most significantly affected sectors, given its sensitivity to consumer demand and sentiment, Moody's said, adding that given the current market situation, an upgrade of JSW Steel's ratings is unlikely in the near term.
However, the outlook could return to stable if improved market conditions lead to a recovery in metrics to pre-outbreak levels, it said.
"The review reflects our concern that JSW will face significant challenges due to the coronavirus-led economic downturn, with declining sales, weak earnings and free cash flow generation because of tepid demand from automakers, manufacturing and other steel consuming industries," Moody's vice president and senior credit officer Kaustubh Chaubal said.
Last week, the Sajjan Jindal-led firm had said it is preparing to scale up production which it had reduced during the nationwide lockdown.
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