S&P Assigns 'Negative Watch' to Hyundai Motor Group Credit Rating

[Asia Economy Reporter Lim Hye-seon] The international credit rating agency Standard & Poor's (S&P) announced on the 2nd that it has placed Hyundai Motor and Hyundai Motor Group affiliates under 'negative watch' for their credit ratings. This measure was taken considering the impact of the novel coronavirus disease (COVID-19).

The credit ratings remain unchanged, with Hyundai Motor, Kia Motors, Hyundai Mobis, and Hyundai Glovis rated 'BBB+', and Hyundai Steel rated 'BBB'.

S&P analyzed, "The global automotive industry, which has been struggling due to demand slowdown since last year, is facing difficulties caused by production disruptions and further demand contraction due to the worldwide COVID-19 pandemic." Earlier, in a report published last month, S&P revised down its global automobile sales forecast for this year from 90.3 million units to 80 million units, a reduction of about 15%.

S&P projected, "Hyundai Motor and Kia Motors' sales this year will decrease by approximately 15% in North America, 20% in Europe, 5% domestically, and over 10% in China and emerging markets," adding, "The combined revenue of the two companies will decline by 8 to 10%, and the discretionary cash flow deficit for this year is expected to expand significantly from the previous estimate of 1 to 2 trillion KRW to 3 to 4.5 trillion KRW."