Moody's drops Daewoo outlook to negative

Moody's Investors Service said it has changed to negative from stable the outlook for Daewoo Capital Corp.'s foreign currency issuer rating of Ba1.

"The negative outlook reflects Moody's concerns over its funding capability and a deteriorating operating environment," said Leo Wah, a Moody's VP/senior analyst.

"As is typical of many non-deposit-taking financial institutions, Daewoo relies on wholesale funding, so a steady capital market without persistent volatility would favor its funding position," said Wah.

"While Daewoo has so far been able to secure sufficient funding in Korea to support its operation, the increasingly tighter domestic capital market would make it more difficult in the future, especially given that commercial paper and asset-backed securities account for more than half of its funding sources," noted Wah.

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