Hyundai Motor Company: commercial commended TFR deals of 2015

Awards | 24 February 2016

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Citi’s ruble accounts receivable discounting solution gets the Kia wheels turning from South Korea to Russia with minimum FX exposure

South Korea’s Hyundai Motor Co and its affiliate Kia Motors Corporation have been affected by China’s reduced demand  –  the largest market for South Korean carmakers – and the strong won.

So, it’s trading relationship with the Russians is particularly important. 

Despite the issues surrounding the Russia/Ukraine crisis, the Russian automobile market is regarded by some observers as one of the hottest in the world and an industry source commented to a South Korean newswire (www.business.co.kr), “It seems that Hyundai and Kia hit the market there by looking well into the economic conditions and personal preferences, and making timely changes.” 

Founded in 1967, the Hyundai Motor Group is the world’s fifth largest automaker based on annual vehicle sales in 2012. Vehicles are sold in 103 countries through some 6,000 dealerships and showrooms. 

Structure of the transaction

Hyundai wanted to change the invoice currency from US dollars to Russian rubles, to centralise the risk of FX exposure under the control of its head office in South Korea. It needed stable ruble accounts receivable (AR) discounting and at discount pricing of RUB Mosprime rate + fixed spread, instead of volatility of trade spread per transaction. 

Citi provided a competitive RUB AR discounting solution with deal preparation at one day prior to booking date. This enabled the client to mitigate its FX risk and provided comfort on managing RUB AR exposure.

 

 

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