A spate of major South Korean firms, mostly shipbuilders and construction companies, had their credit ratings downgraded due largely to their poorer-than-expected third-quarter earnings, industry watchers said Tuesday.

Hyundai Heavy Industries Co., the world's largest shipyard, was cut by one notch by two local rating agencies to "AA" from "AA+"

due to its third-quarter earnings that shocked investors.

Hyundai Heavy said last month that it logged a record quarterly operating loss of 1.93 trillion won (US$1.77 billion) during the July-September period because of low-margin ships and increased costs in building new types of ships and power plants.

The shipbuilder expects this year's operating loss to be some 3.2 trillion won, another worst on record.

"Hyundai Heavy will come under growing pressure for a further rating downgrade unless its business turns around," said Noh Jae-woong, an analyst at the Korea Investors Service.

Daelim Industrial Co., a major construction firm, was cut by Korea Ratings Corp. to "A-" from "A" as it suffered an operating loss of 190 billion won during the third quarter on increased costs from its plant construction project in the Middle East.

Other firms also face downgrades in their ratings outlook due to their business slump.

Rating downgrades are imminent for GS Caltex Co. and SK Energy Co., the country's No. 1 and No. 2 oil refiners, as their key business lines are likely to suffer a lackluster performance, according to analysts.

"A fall in the refining margin would cause a further downgrade in their ratings (for local refiners)," said Hwang Won-ha, an analyst at HMC Investment & Securities. 

Analysts said more local firms may be downgraded this year, especially those in sectors not showing signs of improvement.

"Some segments facing rating downgrades are suffering a slump in their businesses," said Choi Jong-won, an analyst at Samsung Securities. "Their ratings may be further cut down the road if economic conditions do not improve." (Yonhap)