S&P: Jaguar Land Rover outlook positive

Standard & Poor's said it revised the outlook on Jaguar Land Rover Automotive plc (JLR) to positive from stable.

At the same time, the agency affirmed Jaguar Land Rover’s BB long-term corporate credit rating.

S&P also affirmed the BB issue ratings on the senior unsecured notes issued by the company. The recovery rating remains 3, indicating an expectation of meaningful (50%-70%) recovery in the event of a payment default.

The outlook revision follows that on its parent company, Tata Motors Ltd. and reflects S&P’s view that Jaguar Land Rover will continue to generate strong operating cash flows over fiscal years 2015 and 2016 (year-end March 31).

The agency sees at least a one-in-three chance that despite significant capital expenditures and potentially negative free operating cash flows, Jaguar Land Rover’s leverage metrics will remain sufficiently strong to support a higher rating on Tata Motors during the next 12 months.

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