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S&P Affirms Hyundai Motor 'B+' Rating; Outlook Positive

30 May 2000

S&P Affirms Hyundai Motor 'B+' Rating; Outlook Positive

    TOKYO, May 30 Standard & Poor's today affirmed its
single-'B'-plus corporate credit rating on Hyundai Motor Co.  The outlook on
the rating remains positive.  The affirmation reflects the belief that
Hyundai Motor, Korea's largest automaker, will not be called upon to provide
financial support to the Hyundai Group companies that are facing liquidity
problems -- namely, Hyundai Investment Trust & Securities Co. Ltd., Hyundai
Engineering & Construction Co. Ltd., and Hyundai Merchant Marine Co. Ltd.
    Hyundai Motor's ties to other Hyundai Group companies have loosened in
anticipation of the company's imminent disaffiliation from the group, which
was formally agreed upon by the company's board of directors on May 17, 2000.
The strategic task force of the Hyundai Group also publicly announced on
May 25 that Hyundai Motor will apply for disaffiliation to the Fair Trade
Commission sooner than the original timeframe, at least by the end of
June 2000.
    To satisfy the disaffiliation requirements of Korea's Fair Trade Act,
Hyundai Motor is actively disposing of its equity holdings in Hyundai Group
companies, bringing its stake to less than 3% for listed companies and 15% for
unlisted companies.  Also, for the disaffiliation to obtain approval, any
Hyundai Motor directors holding dual directorship in other Hyundai Group
companies must resign from such positions.  Under the disaffiliation process,
which is being closely monitored by the government, it is unlikely that
Hyundai Motor could offer financial support to any troubled group companies
outside the automotive division.
    Hyundai Motor's rating was raised to single-'B'-plus from single-'B' on
Nov. 16, 1999, reflecting strong recovery in the company's operating and
financial performance, better-than-anticipated progress in integrating the
operations of Kia Motors Corp., and the company's successful efforts to
strengthen its capitalization through equity issuance.

    OUTLOOK: POSITIVE
    The rating could be raised within a few quarters if Korea's economy and
auto market see greater stability and if Hyundai Motor continues to improve
its operating and financial performance and adopts a more conservative
financial policy.  Standard & Poor's is also closely monitoring the likelihood
that Hyundai Motor will forge strategic alliances with foreign partners, which
could benefit its credit quality, as well as the company's potential
participation in the bidding for ailing rival Daewoo Motor Corp., which could
adversely affect Hyundai Motor's credit standing. -- CreditWire