Hyundai, Kia see ratings slashed by global firms
Hyundai Motor, Korea’s largest automaker, and affiliate Kia Motors fell in Seoul trading after Fitch Ratings cut their debt to junk levels on waning global auto sales.Hyundai plunged 10 percent, the most in seven weeks, to close at 43,000 won ($30.9).
Kia slumped 11 percent to 6,950 won, while the benchmark Kospi index dropped 6 percent.
Fitch lowered both automakers’ ratings one rank to BB+, the highest noninvestment grade.
Demand in the U.S. and Western Europe is contracting more quickly than Fitch expected.
The slowdown is also spreading into emerging markets, where Hyundai and Kia had been boosting sales, the ratings company said.
“Credit downgrades could weaken sentiment,” Goldman Sachs Group Inc. analysts including Rajeev Das said in a note released today.
The ratings cut also “implies a more difficult capital-raising environment for Hyundai and Kia,” which could raise financing costs and affect profits.
Separately, Standard and Poor’s today lowered its outlook on Hyundai, Kia and part-making affiliate Hyundai Mobis Co. to “negative” from “stable,” reflecting deterioration in global automobile markets and growing uncertainty about the economy, the credit rating company said in a statement.
Standard and Poor’s affirmed its BBB- rating, its lowest investment grade, for the companies’ long-term ratings.
Hyundai plans to cut first-quarter global production 17 percent from a year earlier on the demand slump, Edaily reported today, citing industry officials it didn’t name. Spokeswoman Song Mee-young declined to comment on the report. Bloomberg
with the Korea JoongAng Daily
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