RPT-Fitch affirms Hyundai Capital Auto Funding VIII & IX at 'AAAsf'; outlook stable

Fri May 3, 2013 4:49am EDT

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May 3 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed Hyundai Capital Auto Funding VIII Limited (Hyundai VIII) and Hyundai Capital Auto Funding IX Limited (Hyundai IX). The transactions are securitisations of auto loans in South Korea originated by Hyundai Capital Services Inc. (HCS, rated BBB+/Stable/F2).

The rating actions are as follows:

Hyundai VIII

USD214.2m class A notes due 2016 affirmed at 'AAAsf'; Outlook Stable

Hyundai IX

USD200m class A1 notes due 2017 affirmed at 'AAAsf'; Outlook Stable

USD200m class A2 notes due 2017 affirmed at 'AAAsf'; Outlook Stable

Key Rating Drivers

The affirmations reflect adequate credit enhancement (CE) and stable portfolio performance with low delinquencies and defaults since the previous rating action in June 2012. Delinquencies and defaults may increase marginally over the next 12 months due to pressure from high household debt levels in South Korea.

However, Fitch does not expect the current ratings of each transaction will be affected as the current CE levels are sufficient to absorb potential asset deterioration.

The three-month average delinquency ratio of each transaction has remained low at less than 0.06% since the previous rating action at June 2012, far below the three-month average delinquency trigger of 1.5%. The three-month average default ratio was less than 0.01% as of March 2013 for both Hyundai VIII and Hyundai IX, compared with the trigger at 1.3%.

Hyundai VIII entered the controlled amortisation period in October 2012 and the Class A balance has amortised to 71% of its initial balance. Hyundai IX is still in the revolving period, which is due to end in August 2013.

Rating Sensitivities

Fitch evaluated the rating sensitivities of each transaction under an increased default rate scenario. An increase of the base-case default rate by 108% and 46% for Hyundai VIII and Hyundai IX, respectively, may lead to a downgrade of the rated notes. The recovery rates, time to recovery and prepayment rates were unchanged since closing in this sensitivity analysis.

Initial key rating drivers and rating sensitivity are described further in the new issue reports for Hyundai VIII, dated 10 November 2010 and for Hyundai IX, dated 25 August 2011.

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