POSCO, the South Korean steelmaker, has been downgraded by Moodys Investors Service.

Moody’s has cut the company’s foreign currency bond rating from Baa1 to Baa2, claiming that the steelmaker’s financial leverage will remain elevated and weak over the next two years and that the situation is exacaberated by the current weakness of the steel industry in the region.

POSCO will achieve ‘robust growth’ from its non-steel business, claims Moody’s, and benefit from its large-scale expansion in steel capacity.

Moderate profitability and investments of over US$4.7 billion, however, will weaken the company’s ability to generate positive cash flow and reduce its financial leverage.

Moody’s acknowledged POSCO’s leading position in the Korean steel industry, its globally competitive cost position and its diversified product mix.

Source: Yonhap News Agency/Global Post.