Hyundai company ratings lowered

The Korea Management Consulting & Credit Rating Corp. downgraded the ratings of Hyundai Group companies, including Hyundai Engineering & Construction, from investment grade to speculative grade.

As a result, the capital market fluctuated July 24 with bond yields soaring and most Hyundai stocks plummeting. Market watchers worried that Hyundai Engineering & Construction might experience difficulties in raising funds with the decline of its rating.

In particular, the downgrade was made shortly after the remarks by Finance-Economy Minister Lee Hon-Jae that Hyundai`s financial trouble wasn`t that serious, so it is likely to affect the financial market.

The KMCC announced July 24 that it was to downgrade the ratings of Hyundai Engineering & Construction and Korea Industrial Development from BBB-, an investment grade, to BB+, a speculative grade. Also, it lowered the rating of HEC`s commercial papers from A3- to B+. Hyundai Motors` corporate bond rating, which stood at A-, was downgraded to BBB+.

In this connection, HEC and Korea Industrial Development are expected to suffer difficulties in new offering of corporate bonds and commercial papers, as well as reissue of bonds or CPs at maturity.