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Moody's may cut Posco
Moody's Investors Service said it placed Posco's A1 foreign-currency bond rating on review for possible downgrade.
The action has been driven by an expectation that Posco's financial health will remain weak for the A1 rating over the medium term in view of the company's ambitious capacity expansion plans and appetite for acquisitions, Moody's said.
Although the company's earnings will grow considerably as the steel industry rebounds, the use of cash and debt will considerably increase to fund its hefty investments and working capital deficit, the agency said.
The review also will consider management's higher tolerance for risk and willingness to pursue mergers and acquisition opportunities in both steel and non-steel businesses, Moody's added.
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