Moody’s cuts Posco to Ba1 CFR

Moody's Investors Service said it downgraded Posco Engineering & Construction Co., Ltd. to a Ba1 corporate family rating from a Baa3 issuer rating, and therefore withdrew the issuer rating.

The outlook is stable.

"The downgrade follows the large losses that Posco E&C reported for 1H 2016, because of the cost overruns at its steel plant in Brazil," Moody's vice president and senior credit officer Joe Morrison said in a news release.

"The company is also vulnerable to potential liquidated damages on the same project."

"The rating action also reflects our view that profitability will remain low over an extended period, which should keep the company's financial leverage elevated," Morrison added in the release.

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