Moody's Investors Service has revised to negative from stable the outlook on the Ba3 corporate family rating and senior unsecured rating of Tata Power Company following the announcement that the company has signed a share purchase agreement to buy Welspun Renewables Energy (Welspun) for Rs 92.5 billion in cash.

''The change in outlook to negative reflects the combined effect of 1) entirely debt-funded nature of the transaction, which reduces headroom within the ratings, 2) uncertainty regarding the terms and structure of the bank debt that will be raised to fund the acquisition, and 3) limited details about the quality of the assets being acquired'', says Abhishek Tyagi, a Moody's Vice President and Senior Analyst.

''With this acquisition, Tata Power's debt will increase by approximately 21%, thereby reducing the headroom within the rating'' Tyagi, says, adding ''Moody's understands that Tata Power is raising a bridge bank facility to fund the transaction, and this facility could pressure the company's liquidity profile depending on its terms, including maturity profile''.

Shares of the company declined Rs 1.15, or 1.5%, to trade at  Rs 75.35.  The total volume of shares traded  was  256,683 at the BSE (12.43 p.m., Thursday).