International credit rating agency Standard and Poor's (S&P) has announced that it has affirmed its 'BBB+' long-term rating for South Korean steelmaker POSCO, with the outlook remaining negative.
S&P said that it expects POSCO's credit quality to improve over the next 24 months. The ratio of POSCO's debt to EBITDA is likely to improve and remain below S&P's downgrade trigger by 2015. According to the rating agency, POSCO's capital investment will decline significantly and operating performance will improve modestly, with the company's debt level being likely to remain flat in 2014 compared to 2013.
"POSCO is likely to increase its sales volume by around five percent in 2014 given the completion of domestic and foreign capacity expansion. Also, the potential phasing out of troubled private steelmakers in China, though gradual, is likely to benefit regional steelmakers. Overcapacity in the Chinese steel industry is likely to fall, in our view, resulting in reduced Chinese steel exports and lower and more stable prices for raw materials," S&P noted.