Moody's downgrades GS Engineering's rating outlook

SEOUL, Dec. 15 (Yonhap) -- The ratings outlook for GS Engineering & Construction Corp., South Korea's No. 3 builder by market capitalization, was downgraded by Moody's Investors Service Monday as the company's financial conditions deteriorated amid a weakening property market.

The U.S.-based ratings agency said the outlook for GS Engineering's Baa1 rating
was reduced to Baa2 and the rating may face further cuts because of its high
financial leverage.
"The rating action has been prompted by the material weakening in GS E&C's
financial profile and liquidity position, which has been beyond Moody's
expectation, amid the persistent downturn in the Korean construction industry,"
said Chris Park, a senior analyst at Moody's.
"GS E&C's financial leverage has been adversely affected by increased debt usage,
turning from a net cash to net debt position as a consequence of its investment
activities and working capital consumption in relation to softening property
project pre-sales," Park said.
Builders in South Korea are grappling with the rising number of unsold
apartments, which have spiked to more than 130,000, the most since the 1997/98
Asian financial crisis.
The government and banks are working to allow troubled builders to defer their
short-term debt repayments or face liquidation.
GS Engineering is a unit of GS Group, the nation's seventh-largest family-run
industrial conglomerate.