Moody’s might drop Posco

Moody's Investors Service said it placed Posco Engineering & Construction Co., Ltd.'s Baa3 issuer rating on review for downgrade.

"The rating action reflects our expectation that Posco E&C's profitability will weaken in 2016 and remain low over an extended period, given its increased costs and also potential charges at its large-scale steel plant project in Brazil," Moody's associate managing director Chris Park said in a news release.

"The lower level of profitability should keep the company's financial leverage elevated."

Moody's expects Posco E&C's adjusted EBITA margin to decline to about 2.1% in 2016 from the 2.9% recorded in 2015 because of the increased level of expenses it is recognizing in the first half of 2016 for its project in Brazil.

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