Moody's confirms Posco Engineering

Moody's Investors Service said it confirmed Posco Engineering & Construction Co. Ltd.'s Baa1 issuer rating.

The outlook is negative.

The rating reflects an expectation that Posco's weak financial profile, arising from sizeable investment and acquisition activities and lower profitability, will improve to a level consistent with its standalone rating of Baa3 over the medium term, Moody's said.

Its adjusted debt-to-EBITDA ratio is estimated to have grown to about 6x in 2008 from 3.2x a year earlier and is expected to remain above 4x in 2009, which is significantly weak for its rating, the agency said.

But, Moody's said it expects a gradual deleverage to take place over the next two years, driven by robust revenue growth backed by the healthy order backlog and turnaround in margins.

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