Moody’s cuts credit rating of nation’s largest steelmaker

Posco had its credit rating lowered one level to the second-lowest investment grade by Moody’s Investors Service on concern the Korea’s largest steelmaker will struggle to cut debt amid a tough sales environment.

“Persistent weakness” in Asia’s steel industry will probably prevent Posco from making a significant improvement in profit margins, the credit ratings company said yesterday in a statement. It downgraded Posco’s foreign currency bond rating to Baa2 from Baa1.

The steelmaker reported a slump in third-quarter profit last month and cut its 2013 sales forecast for a second time.

“Posco’s high level of debt, the challenging fundamentals it faces in the steel industry and significant uncertainties about its ability to implement significant de-leveraging measures are key factors behind the rating downgrade,” said Chris Park, a Moody’s vice president and senior credit officer. Bloomberg