Moody’s: Posco view to negative

Moody’s Investors Service said it revised to negative from stable the outlook on the Baa3 issuer rating of Posco Engineering & Construction Co., Ltd.

Moody’s also said it affirmed the company’s Baa3 issuer rating.

The negative outlook primarily reflects an expectation that Posco’s profitability and financial leverage will remain weak for its standalone credit quality over the next few years, the agency said.

Saudi Arabia Public Investment Fund’s planned 400 billion in Korean won capital injection for the company will help Posco lower its debt level, but will not be sufficient to offset the pressure on its financial leverage, Moody’s said.

The ratings are supported by its significant scale, sizable order backlog, captive group works and good degree of segment diversity, the agency said.

Such strengths are offset by the significant business risk and contingent liabilities at the company’s housing business and volatile cash flow, Moody’s said.

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