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April 12, 2010

SOUTH KOREA: High won hits Hyundai shares

Hyundai Motor fell the most in more than three months in Seoul trading as the won rose to an 18-month high, reducing the company’s earnings from exports.

Hyundai Motor fell the most in more than three months in Seoul trading as the won rose to an 18-month high, reducing the company’s earnings from exports.

Hyundai dropped 6.7% to close at KRW118,000 (US$106), affiliate company KIA Motors was down 7.2%, the most since July last year, to KRW25,050 (US$22.5) on the biggest trading volume since 5 January, according to Bloomberg data.

The won reached its highest level against the dollar in more than 18 months as South Korea’s central bank raised its economic growth forecast and a European Union rescue package for Greece boosted demand for higher-yielding assets.

The won rose 0.4% to 1,114.13 per dollar after reaching 1,111.38, the highest since 16 September, 2008.

A stronger won cuts into Hyundai ’s and KIA ’s earnings from exports. Sales outside Hyundai ’s home market accounted for half of its revenue last year.

Hyundai and KIA sold a record 4.63m vehicles globally last year aided by a weaker won which allowed them to spend more on promotions.

Separately, Reuters reported Hyundai plans to sell five-year dollar bonds at an indicated price of around 210 basis points over US treasuries.

Sources told the news agency the borrower nominated Barclays Capital , Bofa Merrill Lynch , Citigroup , Goldman Sachs and Nomura to handle the sale of the benchmark-sized offering.

“The proceeds will be mostly used to refinance existing debt at Hyundai Motor Manufacturing Czech,” said a statement from Standard & Poor’s, which has rated the bonds BBB-minus.

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