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S&P Confirmed The Ratings Of Hyundai And Kia At "BBB+" With A Negative Outlook

S&P Confirmed The Ratings Of Hyundai And Kia At "BBB+" With A Negative Outlook

S&P Global Ratings confirmed the long-term Issuer ratings of South Korean automakers Hyundai Motor and Kia Motors at "BBB+," the outlook for the ratings is negative, the agency said.

Thus, the agency removed the ratings of companies from the list for revision with a possible downgrade, where they were placed on April 2.

The confirmation of the S&P rating is based on expectations that the companies will demonstrate stable operating performance in the current year, mainly due to stable sales in the domestic market, improved product range, and efficient cost management.

"The negative outlook reflects continued uncertainty about the full recovery from COVID-19 disruptions and the ability to maintain stable profitability in a challenging operating environment, including a possible weakening of the Korean market," the Agency comments.

According to the agency's experts' expectations, the volume of car sales by concerns will decrease by about 15% at the end of the year. "Our baseline scenario indicates a clear and sustained recovery in profitability in 2021 and 2022, despite the uncertainty of the global auto market," the report also notes.

Hyundai Motor Company was established in 1967 and has been part of the Hyundai Kia Automotive Group since 1999. It has a headquarter in Seoul. The largest automaker in South Korea and the fourth in the world; produces cars, trucks, and buses.

In our view, HCS plays a significant role in the group's long-term strategy of promoting sales of new cars. The company provides financing for approximately 45% of the group's car sales, which enables it to maintain a strong franchise in the domestic auto finance market. HCS also supports the auto sales of Hyundai Motor Group in global markets. The company is an integral part of the group and shares the Hyundai brand name. We believe the parent group has a strong commitment to provide support to HCS, either through equity infusions or letters of support. As of June 30, 2020, HMC (BBB+/Negative/--) and Kia (BBB+/Negative/--) collectively held about 80% in HCS.

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