POSCO Construction Recovers Credit Rating to A+ After 3 Years

[Asia Economy Reporter Yoo In-ho] POSCO Engineering & Construction announced on the 18th that its credit rating was upgraded one notch from A0 to A＋ this year.

Korea Credit Rating, a joint venture credit rating agency with Moody's, upgraded POSCO Engineering & Construction's unsecured bond credit rating from A0 (positive) to A+ (stable), and its commercial paper credit rating from A2 to A2+, each by one notch. This marks the recovery of the A+ rating for the first time in three years since 2017.

Korea Credit Rating had adjusted POSCO Engineering & Construction's credit rating outlook from A0 stable to A0 positive in April last year, and upgraded the credit rating within a year.

Korea Credit Rating explained the background for the credit rating upgrade of POSCO Engineering & Construction as follows: "In the first quarter of this year, sales and operating profit increased compared to the same period last year, and due to the increased uncertainty in the real estate market caused by the novel coronavirus infection (COVID-19), the company has proactively secured liquidity."

The Songdo International Business District development project, which had been suspended since July 2015, was normalized in September 2018, and the project finance contingent liabilities related to the Songdo development project, which reached 1.3 trillion KRW at the end of 2017, significantly decreased to 632 billion KRW as of the end of March.

A POSCO Engineering & Construction official said, "This is the result of efforts to stably diversify the business portfolio, including generating favorable profits in the construction sector, supplying housing mainly through urban maintenance projects with low sales risk, and focusing order-winning capabilities in the plant and civil engineering fields." He added, "Based on the upgraded credit rating, we will continuously improve our financial structure to establish a stable financial structure and ensure steady growth."

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