S&P rates new Hyundai notes BB+

Standard & Poor's said it assigned its BB+ rating to the proposed $400 million senior notes due 2008 to be issued by Hyundai Motor Manufacturing Alabama LLC. The notes are guaranteed by Hyundai Motor Co. (BB+/positive/--).

"The rating on Hyundai is supported by the company's dominant position in Korea's automobile market and its ability to withstand the current downturn in the U.S. and European auto markets," said S&P credit analyst Eun Jin Kim.

"The rating is constrained by Hyundai's limited market presence in the global auto industry, the increasing competitive pressure it faces in the U.S., and the possibility that the company will need to provide further support to its credit card subsidiary."

S&P said the rating also reflects potential benefits from Hyundai's alliance with DaimlerChrysler AG (BBB/negative/A-2).

The positive outlook on the issuer rating on Hyundai reflects the likelihood of improvement in the credit quality of the company over the next few years, if it is able to continue profitably expanding its presence in overseas auto markets, which would reduce its dependence on the Korean automobile market. Achieving this goal is likely to hinge on Hyundai's ability to further improve its product quality and brand image.

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