- Succeeded in re-entering the international financial market
- Stabilized capital and hedged exchange risk
Kia Motors disclosed that it`s issuing a US$200million worth of corporate bonds payable by 2006. With CSFB (Credit Swiss First Boston), an international investment bank, as the managing underwriter, the corporate bond was fixed at US Treasury + 4.7% with 9.375% interest rate. The Kia bonds will be listed in the Singapore Stock Exchange.
The Money generated by the bond sale will be used in paying off short-term loans in Korean won, investing in new product developments and as general operating capital.
This issuance carries an important meaning in Kia Motors` first re-entering the international bond market for the first time since the financial crisis at the end of 1997. Since the bond issuance will enable Kia to improve its image and financial structure, the company is expected to strengthen its foorhold for international investment in the future.
By issuing the bonds, Kia is now able to raise its long-term capital while managing exchange risk following the foreign cash flow.
Moody`s Investors Service and Standard & Poor`s have recently reported that Kia Motors is rated `Ba3" and `BB-` respectively, while both evaluated that the credit standing of Kia will be " stable" hereafter.
As a result of its increased domestic sales and export coupled with continued efforts to cut the manufacturing cost, Kia Motors has set a record last year by reaching the highest net profit of 331 billion won for the first time.