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Hyundai Motor Outlook Revised to Negative By S&P

7 August 1997

Hyundai Motor Outlook Revised to Negative By S&P

    MELBOURNE, Aug. 7 -- Standard & Poor's today has affirmed its
triple-'B'-plus long-term credit rating on Hyundai Motor Co.
    At the same time, Standard & Poor's has revised the rating outlook to
negative from stable.
    Hyundai Motor faces heightened uncertainties in the Korean automobile
industry, triggered by the recent problems of the Kia Group.  Hyundai Motor
may take part in a joint ownership plan for ailing Kia Steel, along with
Daewoo Motor and Kia Motor, which could increase the financial burden on
Hyundai Motor and the Hyundai Group.  Market shares in the domestic automobile
market have been fluctuating, with increased sales penetration by Daewoo
Motor, in addition to deep discounting by Kia Motor to reduce inventory
levels.  The expected entry of Samsung Motor is another destabilizing factor
for the automobile industry, given the firm's strong interest in acquiring
existing automakers.
    Hyundai Motor benefits from its dominant market position in the growing
Korean automobile industry, competitive position in automotive markets
worldwide, and strong financial flexibility as one of the core companies of
the Hyundai Group.  It is the largest automobile manufacturer in Korea,
offering a full line of passenger cars and commercial vehicles, with a market
share of over 40%.  Hyundai Motor has demonstrated strong earnings performance
as a result of continued growth in sales volume at home and abroad.  The
company's capital spending continues to be high, and its moderately high debt
leverage is expected to increase further despite increasing internal cash
flow.
    OUTLOOK: Negative.
    Unstable industry conditions and the potential financial burden related to
Kia Steel could adversely affect Hyundai Motor's operating performance and
financial profile in the short to medium term, Standard & Poor's said.
-- CreditWire

SOURCE  Standard & Poor's CreditWire