Upgraded Credit Rating
Hyundai Motor Group, the umbrella organization of Hyundai Motor, Kia Motors, and auto parts maker Hyundai Mobis, said on Jan. 30 that Standard & Poor's (S&P) raised its credit rating for the three companies from BBB+ to A-.
This is the first time that the group’s three main companies have received an A level rating from a major global appraiser.
Regarding the upgrades in long-term credit ratings of the companies, S&P said, “Regardless of the tough business environment, including unfavorable foreign currency movements, we have considered that the companies have maintained a leading market position and achieved outstanding profitability. Also, they have constantly strengthened sound financial structures.”
S&P also said, “The companies have secured enough liquidity to deal with economic uncertainties, and we believe that their financial stability will be further strengthened in the future, creating a significant amount of cash flow based on its highest profitability in the industry.”
A representative of Hyundai Motor Group has said that the company management believes that their recent announcements based on their improved brand value and product quality, including a plan of its fuel efficiency improvements, the strategy of eco-friendly vehicles, and the plan of the mid-term large scale investments have played a role in the upgrade of its credit rating.
An official from Hyundai Motor Group said, “Even though our credit rating has been upgraded by one notch, the BBB-level mark and the A-level mark are totally different in terms of symbolism. It means that our group has been recognized for securing an excellent financial structure.” The automobile industry expects that the group will set a foothold in the global market to increase its sales through upgrades in credit ratings by S&P.
There are also prospects that this will not only improve its credit rating in the global market, but also the competitiveness of its auto financial products will be strengthened, cutting the costs of financing in the affiliated financial corporations and the foreign financial sectors, which are affected by the credit ratings of main companies in the Hyundai Motor Group.
Meanwhile, S&P raised credit ratings on the three companies of Hyundai Motor Group four times to the A-level mark since 2004, when these companies rated BB+, a level meaning not suitable for investment.