Fitch: Hyundai Capital's Ratings Unaffected by GECC's Divestment
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.
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