International credit rating agency Moody's has confirmed South Korea-based Hyundai Steel Co Ltd's Baa3 rating with a negative outlook.
Moody's stated that the rating confirmation primarily reflects the positive impact that the merger between Hyundai Steel and Hyundai Hysco Co. Ltd's (unrated) cold rolled steelmaking business which was completed on December 31, 2013 will bring to Hyundai Steel's business and financial profile. Moreover, the merger will provide Hyundai Steel with a vertically integrated and more balanced product portfolio.
The improvement in financial leverage will also be underpinned by Hyundai Steel's lower capital expenditure and earnings contribution from its third blast furnace.
According to Moody's, the rating could be downgraded if there is a continued decline in Hyundai Steel's profitability or if it undertakes large-scale investments.
