(Media release from Standard & Poor's)
TOKYO, Nov 17 - Standard & Poor's Ratings Services today assigned its 'BB+' rating to the proposed senior notes due 2010 to be issued byMotor Manufacturing Alabama, LLC .
The notes are unconditionally and irrevocably guaranteed byMotor Co. (BB+/Positive/--).
"The rating on Hyundai is supported by the company's dominant position in Korea's automobile market and its ability to withstand the current downturn in the U.S. and European auto markets," said Standard & Poor's credit analyst Eun Jin Kim. "The rating is constrained by Hyundai's limited market presence in the global auto industry, the increasing competitive pressure it faces in the U.S., and the possibility that the company will need to provide further support to its credit-card subsidiaries," Ms. Kim added.
The rating also reflects potential benefits from Hyundai's alliance with DaimlerChrysler AG (BBB/Negative/A-2).
The positive outlook on the issuer rating on Hyundai reflects the likelihood of improvement in the credit quality of the company over the next few years, if it is able to continue profitably expanding its presence in overseas auto markets, which would reduce its dependence on the Korean automobile market.
Achieving this goal is likely to hinge on Hyundai's ability to further improve its product quality and brand image.
Standard & Poor's expects Hyundai's consolidated operating margin to remain at about 6%-7% in the medium term. Cash flow is expected to remain satisfactory, with funds from operations to total debt (adjusted for captive finance debt) between 55%-65%.
The group's cash flows should also exceed its relatively high capital investment requirements, including spending on the construction of an assembly plant in the U.S. Contact: Eun Jin Kim, Tokyo (81) 3-3593-8728