Global credit appraiser Moody's Investors Service Inc. said Tuesday it has revised down the credit outlook for the construction unit of South Korean steelmaker POSCO to "negative" from "stable," citing its weak financial condition.

The outlook revision for POSCO Engineering & Construction Co. is attributable to a forecast that its profitability and financial health will likely remain vulnerable for the next one to two years, the global appraiser added.

POSCO E&C's EBITDA, or earnings before interest, tax, depreciation and amortization, is expected to stand at an average of 3.3 percent over the next two years, down from last year's figure of 3.8 percent, according to Moody's.

A company's EBITDA is a key financial indicator of profitability widely used by investors to gauge a possible investment.

Moody's rating outlook downgrade of POSCO E&C came despite the builder's announcement earlier in the day that it has raised 400 billion won ($357.6 million) through stock offerings to the Saudi Arabia-based Public Investment Fund.

The capital infusion will help improve its financial condition, the builder said.

Moody's, however, said the stock sale is not enough to offset the pressure from its excessive borrowing, although it may reduce the level of indebtedness.

Moody's retained the builder's credit rating at "Baa3", the 10th highest in the scale. But it said it may lower the credit rating as well should its low profit margins and weak cash flow persist.

POSCO announced early this month it will sell its 38 percent stake in the builder to the Saudi Arabian sovereign wealth fund, but the plan has been delayed as the company faced an ongoing prosecution probe for allegedly creating a slush fund. (Yonhap)