Fitch Ratings has downgraded South Korea-based steel producer POSCO's Long-Term Issuer Default Rating or IDR and senior unsecured rating to 'BBB+' from 'A-', with a negative outlook beimg assigned. Further, the agency has affirmed POSCO's Short-Term IDR at 'F2'.
The downgrade reflects deterioration in POSCO's financial leverage so far in 2012 and 2011, as a result of incurring high levels of debt to fund aggressive investments and weakened profitability. Fitch currently projects adjusted net debt to EBITDAR to exceed 3.0x in 2012 and 2013, which is well above the agency's prior negative rating guideline of 2.0x. The negative outlook reflects low visibility and uncertainty regarding the likely recovery of the steel industry recovery in 2013.
