OREANDA-NEWS. Fitch Ratings says that Hyundai Capital Services Inc.'s (HCS, BBB+/Stable) ratings will not be affected by General Electric Capital Corporation's (GECC) divestment of just over half its stake in HCS. HCS's Long-Term Issuer Default Rating (IDR) remains equalised with that of Hyundai Motor Company (HMC; BBB+), HCS's majority shareholder and the flagship company of Hyundai Motor Group. HCS is a captive auto financing company to the group.

Fitch has treated GECC's minority stake in HCS as an opportunistic investment and has not given a rating uplift for that. This means that GECC's partial or full divestment would not affect HCS's ratings. Fitch takes a similar approach to GECC's 43% stake in Hyundai Card Co., Ltd. (HCC; BBB/Stable), which GECC also plans to divest.

The equalisation of HCS's IDR with that of HMC is based on Fitch's belief that HCS is a core subsidiary of HMC and there is a high probability of support in times of need. The accumulation of HCS's shares by the Hyundai Motor Group underpins this view. HCS provides financing for about 70% of buyers who sought financing to buy vehicles from HMC and Kia in 9M15, down from 90% in 2010.

HMC and Kia Motors Corporation (Kia, BBB+/Stable), the two key auto-makers of the group, on 5 January 2016 acquired a 23% stake in HCS from IGE USA Investments (IGE), an offshore subsidiary of GECC. The Hyundai Motor Group's stake in HCS is now 80%. Should IGE fail to divest its remaining 20% stake in HCS to a third party, we expect IGE to exercise its put option to sell the balance to HMC, causing the group's stake in the auto financier to be 99.8%.

Fitch's latest report on HCS, dated 6 November 2015, is available at www.fitchratings.com.