[THE INVESTOR] Moody’s Investors Service announced on Sept. 2 that it has downgraded the credit rating of POSCO Engineering & Construction to “Ba1," a level down from “Baa3”. The rating outlook remains “stable."
“The downgrade follows the large losses that POSCO E&C reported for H1 2016, because of the cost overruns at its steel plant in Brazil,” said Joe Morrison, vice president and senior credit officer at the international ratings agency, adding that “the company is also vulnerable to potential liquidated damages on the same project.”
The construction subsidiary of South Korea’s largest steelmaker posted operating loss of 180 billion won (US$161 million) in the first half of this year. Based on the performance and the potential liquidated damages, Moody’s expects that POSCO E&C will report a sizeable loss for all of 2016.
By Hwang You-mee (
glamazon@heraldcorp.com)
