S&P Downgrades Hyundai Steel Credit Rating Outlook to 'Negative'

[Asia Economy Reporter Yoo Hyun-seok] The international credit rating agency Standard & Poor's (S&P) announced on the 5th that it has revised Hyundai Steel's credit rating outlook from 'Stable' to 'Negative.' However, the credit rating of 'BBB' was maintained.

S&P stated, "Amid the economic slowdown in the Asia-Pacific region, Hyundai Steel's operating performance pressure will continue due to falling steel product prices and decreased sales volume," and assessed, "There is a possibility that Hyundai Steel's credit rating may be downgraded within the next 24 months due to deteriorating performance." It added, "The slowdown in the steel industry in the Asia-Pacific region is expected to continue for the next 1 to 2 years," and "The macroeconomic slowdown caused by the US-China trade war will continue to exert pressure on the regional steel industry."

Furthermore, S&P analyzed, "Hyundai Steel's adjusted borrowings are expected to remain at around 11 trillion won over the next 24 months, which will burden credit indicators," and "Hyundai Steel's discretionary cash flows last year are estimated to record a deficit for the first time since 2015 due to deteriorating operating performance."

It also explained, "Hyundai Steel's 'BBB' credit rating is three notches higher than its standalone credit profile of 'bb,' reflecting the view that the company is highly likely to receive extraordinary support from Hyundai Motor Group in case of financial difficulties," and "Considering the close business relationship between Hyundai Steel and Hyundai Motor Group's finished car division, Hyundai Steel is evaluated as a strategically important subsidiary."

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