Moody's may cut Tata Power

Moody's Investors Service said it continues to review for possible downgrade Tata Power Co. Ltd.'s Ba1 corporate family rating and Ba2 senior unsecured debt rating.

The company was originally placed on downgrade review in January and the latest rating action follows the announcement that Tata Power has signed definitive agreements to purchase 30% equity stakes in two major Indonesian thermal coal producers and a related trading company, Moody's said.

To the extent that the acquisition is majority debt-funded, the company's consolidated debt level could double from $1 billion as of March 31, 2006 , thereby further weakening its credit metrics, Moody's said.

At the same time, the negative financial impact of this transaction has to be considered in conjunction with the company's overall expansion plan and changing risk profile, the agency added.

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