Moody's: Posco unchanged

Moody's Investors Service said that its Baa1 issuer rating and negative outlook on Posco Engineering & Construction Co., Ltd. remain unchanged following news of a proposed rights issue.

The agency said it considers the KRW 500 billion rights issue credit-positive, as it will immediately strengthen the company's capital structure and liquidity, Moody's said.

The rights issue reinforces the two-notch rating uplift from the Baa3 standalone rating, based on the high likelihood of parent support in the event of stress, the agency said.

Moody's maintained its negative outlook because the effect of the issue on the company's financial profile could be limited, as a large chunk of the proceeds may be used to fund its growing investments over the medium term.

Given this and the slower-than-expected improvement in its operating performance and cash flow, its financial profile is likely to remain weak, the agency said.

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