S&P lifts S-Oil to stable

Standard & Poor’s said it revised the outlook on S-Oil Corp. to stable from negative.

The agency also said it affirmed the company’s BBB long-term corporate credit rating.

The outlook revision reflects expectations that the sustained recovery in operating cash flows will somewhat offset the negative pressures from its plans to undergo large scale investments, S&P said.

The agency said it assumes S-Oil will incur about 3.8 trillion in Korean won in total capital expenditures for this project between 2015 and 2017, in addition to annual maintenance requirements.

These investments are likely to be debt-funded, leading to heavy negative free operating cash flows in 2016 and 2017, S&P said.

The company’s capital expenditures are expected to decline after the completion of the large scale investment, helping the company to achieve positive free operating cash flows again from 2018, the agency added.

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