SEOUL, March 26 (Yonhap) -- Moody's Investors Service said Thursday that it has placed the ratings of Hyundai Motor Co. and its affiliate Kia Motors Corp. on review for downgrade due to the coronavirus outbreak.
The global credit rater said the two South Korean carmakers remain vulnerable to the spread of the COVID-19 pandemic and predicted demand for new vehicles will reduce meaningfully over the coming months, especially in the Europe, the Middle East and Africa (EMEA) and North American markets.
"Accelerating incidence of the coronavirus across the U.S. and EMEA could lead to even more extended production shutdowns and a much delayed recovery on unit sales for Hyundai Motor and Kia Motors," Moody's said in a statement.
"For now, Moody's assumes a reasonable pace of recovery of demand as the third quarter develops, however the risk to the downside is considerable and further downside scenarios around the severity and duration of the pandemic are uncertain."
Hyundai Motor and Kia Motors have suspended most of their plants in the United States and Europe to prevent the spread of the coronavirus in line with strict movement bans and lockdowns.
Moody's said its current assumptions are that global demand will shrink by about 14 percent for all of 2020, and could be down in the range of 30 percent for the second quarter.
Moody's placed Hyundai Motor's current rating of Baa1 on review for downgrade, with an outlook changed to rating under review from negative. The rating agency also placed Kia Motors' current rating of Baa1 on review for downgrade, with an outlook changed to ratings "under review from negative."
Moody's said it expects to conclude the review process within 90 days.
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