HMM’s ongoing capital increase by issuing new stocks for some 700 billion won value will impact restrictive on its credit ratings, it is predicted.
Korea Investors Service (KIS), a Korean credit-rating agency, has indicated in a statement dated Oct. 17 of its opinion on Hyundai’s capital increase, citing, “The vital factor affecting Hyundai’s credit-rating is the upgrading in its fundamentals such as the lifting of its profitability and the strengthening of its business competitive edge.”
If Hyundai’s capital increase is effected as planned, its current debt ratio of 387.4% as of the end-June this year is expected to fall as low to 180.3%, upgrading its financial structure. But if it fails to normalize its operation at a rapid pace, it would likely face liquidity crisis again. Nevertheless, the said capital increase would have a little impact on its credit-rating, KIS said.
HMM has been posting the business deficit since 2011 amid the prolonged shipping slumps, and it has marked 259.3 billion won in the red in the first half of this year with its capital impaired by 28%, making its normalization more uncertain.
KIS said that it would readjust Hyundai’s credit-rating by monitoring various factors such as the future prospect of whether container market recovers or not, the changing competitive structure in the global container liner shipping markets and Hyundai’s competitive edge which is whether leveled up or not.