POSCO Engineering & Construction (POSCO E&C) announced on June 18 that its credit rating has been raised by one notch from A0 to A+ this year, recovering the A+ level for the first time in three years since 2017.
Korea Investors Service, an affiliate of Moody’s Investors’ Service, raised POSCO E&C's credit rating on non-guaranteed bonds from A0 (positive) to A+ (stable) and corporate bill credit from A2 to A2+.
POSCO E&C has become the only builder whose credit rating has been upgraded this year, as Korea Investors Service raised its credit rating in a year after adjusting POSCO E&C's credit rating outlook from A0 stable to A0 positive in April last year.
Korea Investors Service explained that POSCO E&C's sales and operating profits in the first quarter of this year rose year-on-year, and that it is preemptively securing liquidity amid growing uncertainties in the real estate market due to the COVID-19.
In addition, as the Songdo International Business Complex development project, which has been suspended since July 2015, was normalized in September 2018, PF contingent liabilities related to the project, which reached 1.3 trillion won ($1.1 billion) at the end of 2017, have been greatly reduced to 632 billion won ($522 million) (as of the end of March 2017), and the remaining outstanding bonds of CSP (204.7 billion won) of Brazil and LCT (262.7 billion won) of Haeundae, will be recovered within the year to improve their financial structure.
In particular, Korea Investors Service appraised that POSCO E&C’s construction sector is generating good profits and that it is increasing its responsiveness to fluctuations in the real estate market by providing housing centered on urban readjustment projects with low risk of sale.
In addition, the company has been trying to diversify its business portfolio by increasing the proportion of the non-building sector by focusing on plant and civil engineering, the credit rating agency said.
An official of POSCO E&C said, "We will continue to improve our financial structure so that stable financial structure can be established and solid growth can be combined based on the upgraded credit rating."
