Good News After a Long Time... Hyundai Capital's Credit Rating Upgraded

by Lee Minwoo

Published 04 Jan.2023 17:15(KST)

AA Stable → AA Positive Upgrade

Hyundai Capital New Headquarters (Provided by Hyundai Capital)

[Asia Economy Reporter Minwoo Lee] Amid crisis talks in the capital industry, Hyundai Capital's credit rating outlook has been upgraded. This is interpreted as due to conservative risk management resulting in sound asset quality, as well as a positive outlook for the business conditions of its parent company, Hyundai Motor Group.

On the 4th, NICE Credit Rating upgraded Hyundai Capital's senior unsecured bond credit rating outlook from AA Stable to AA Positive. This contrasts with Lotte Capital's long-term credit rating outlook being downgraded from AA- Stable to AA- Negative, while other capital companies' credit ratings and outlooks remained unchanged.

NICE Credit Rating pointed to Hyundai Capital's parent company, Hyundai Motor Group, as the primary reason for the outlook upgrade. Hyundai Capital holds a 99.8% stake in Hyundai Motor Group (Hyundai Motor 59.7%, Kia 40.1%). Hyundai Capital is a captive finance company of Hyundai Motor Group, holding strategic importance and securing a very strong business foundation.

Dongyoung Ho, lead researcher at NICE Credit Rating, explained, "Hyundai Capital's capture rate within Hyundai Motor Group (the usage rate of Hyundai Capital by Hyundai Motor and Kia car buyers) was 54.2% of total sales volume in the third quarter of last year," adding, "This is similar to global captive finance companies such as GMF and FMCC."

Additionally, the upgrade of Kia Motors' rating outlook was also viewed positively. On the 29th of last month, NICE Credit Rating maintained Kia's long-term credit rating at AA and upgraded its rating outlook to positive. The upgrade of the rating outlook for Kia, a core company of Hyundai Motor Group, has strengthened the overall creditworthiness of the affiliates.