International credit rating agency Moody's has announced that it has downgraded South Korean steelmaker Hyundai Steel's rating to Baa3 from Baa2. The credit rating agency said the company’s outlook is negative.
Moody’s expects global and regional steel demand to be significantly affected in a negative way by the coronavirus pandemic and hence this situation will possibly cause a loss in Hyundai Steel's profitability and restrain the company from reducing its debt.
Hyundai Steel's annual EBITDA is expected to drop further in the next 12-18 months compared to the KRW 2.0 trillion ($1.62 billion) recorded in the previous year.
According to Moody’s, many sectors, regions and markets are facing a credit shock due to the rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook and decreasing oil prices, as well as asset price declines. The steel sector has been affected by the shock given its exposure to cyclical end-markets such as the auto sector, which are vulnerable to the outbreak continuing to spread, Moody’s stated.