Moody's upgrades Posco

Moody's Investors Service said it upgraded to Baa1 from Baa2 the senior unsecured rating of Posco.

The outlook is stable.

The upgrade reflects an expectation that the improving trend in Posco's financial profile will be sustained over the next one- to two-years, driven by continued debt reductions and robust earnings, Moody's said.

The agency said it expects Posco's adjusted debt-to-EBITDA ratio to fall to about 2.6x over the next 12- to 18-months from 2.9x in 2017.

Such improvements will be supported by Posco's likely strong positive free cash flow, which should further reduce debt, Moody's added.

The company has premium products and steady industry fundamentals, which helps mitigate potential softening in demand from China's property and infrastructure sector, the agency said.

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