Moody's ratings says that Hyundai Motor Group's reorganisation plan will unlikely have an immediate impact on Hyundai Mobis Co., Ltd.'s and Hyundai Glovis Co., Ltd.'s ratings and outlook.
Hyundai Mobis said last week it will spin off its module and after-service parts businesses and merge them with affiliate Hyundai Glovis.
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The move comes as part of parent Hyundai Motor's plans to overhaul its structure in order to bolster growth and shareholder value, while also reforming its complex cross-sharing holding structures.
"Although the spin-off will weaken to some extent Hyundai Mobis' strong business and financial profile, the company's Baa1 rating will continue to reflect its net cash position and mirror the group's overall credit quality, because of its status as the de facto holding company of the group following the reorganization," says Wan Hee Yoo, a Moody's Vice President and Senior Credit Officer.
At the same time, Moody's said the merger with Hyundai Mobis' module and after-sales parts businesses will strengthen Hyundai Glovis' business and financial profile, and is credit positive for its standalone credit strength, which is equivalent to a Baa2 rating level.
"However, it will not have an impact on Hyundai Glovis' Baa1 rating, given that the rating currently incorporates a one-notch uplift, based on the high likelihood of support from Hyundai Motor Group companies," adds Yoo.
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By GlobalDataThe merger transaction is scheduled to complete in July 2018.
