HCI gets first investment grade rating from Fitch

Hyundai Commercial (HCI) has received an investment grade rating of BBB from Fitch Ratings. As the captive financier of Hyundai Motor Group (HMG), it was the first time that HCI has received a global credit rating the company said.

Fitch stated its ratings are “underpinned by HCI’s synergistic role as a captive financier, accounting for about 40% of total commercial vehicles sold domestically by Hyundai Motor Company and Kia Corporation.” However, this was not the only area highlighted. Fitch also stressed it believes “HCI’s broadly stable funding access reflects better lender and investor confidence” and “HCI navigated domestic bond market stresses” based on its risk management capacity and asset quality.

HCI said that in practice, its asset portfolio is a balanced one consisting of a stable captive industrial finance, a higher-return corporate finance and investment finance areas. Such a balanced portfolio provides diversification of assets maturities as well as industries, which accordingly enables not only for liquidity risk to be strategically and mutually complemented throughout economic fluctuations but also makes it possible for HCI to guard its financials during a crisis.

“In order to further solidify its stable revenue structure, HCI is continually striving to expand to new captive channels,” said the company in a statement. “Joining hands with leaders of the commercial and construction vehicle market, HCI has widened its reach beyond large trucks and buses to various commercial vehicles and equipment such as excavators, forklifts and special-purpose vehicles. Industry experts say, just as Hyundai Card has succeeded in its private label credit card strategy, HCI will play a leading role in industrial finance as it extends its influence through captive channels.”

HCI said it is currently providing financing for more than 30% of the construction equipment of HD Hyundai Group, fuelled by partnership agreements with HD Hyundai Construction Equipment and HD Hyundai Xite Solution.

It also said that HCI has struck a partnership deal with an unnamed special-purpose vehicle maker. HCI said that this expansion of captive channels will not only assist the sales of the partner companies but will also generate a stable revenue source for HCI.