Lotte Rental has received an investment-grade rating of ‘Baa3’ from Moody’s, making it the first in the domestic rental industry to achieve this. Moody’s is widely regarded as one of the top three credit rating agencies globally, alongside Standard & Poor’s (S&P) and Fitch.
The credit rating assessment by Moody’s, which commenced in December, was concluded after a comprehensive evaluation of Lotte Rental’s financial structure, corporate performance, management credibility, and government regulations.
Moody’s positively assessed Lotte Rental’s ▲largest domestic sales network and excellent business performance ▲high EBITDA and interest coverage ratio ▲ability to secure liquidity based on a large asset base. As of 2023, Lotte Rental’s EBITDA, which demonstrates the company’s actual cash-generating ability before taxes and interest payments, stood at 1.3791 trillion KRW. An interest coverage ratio exceeding 1.5 is generally considered indicative of strong financial health, and Lotte Rental’s interest coverage ratio is at 2.2 times. By comparison, among the top 500 companies in revenue that submitted financial statements in the first half of 2023, the average interest coverage ratio was 1.16 times.
This is the first time Lotte Rental has received a credit rating from an overseas credit rating agency. The ‘Baa3’ rating from Moody’s is equivalent to that of Tesla in the U.S. and SK Innovation in Korea. By domestic credit rating agency standards, it corresponds to the AA+ to AA- range. Lotte Rental also received a ‘Baa3’ rating regarding its standalone creditworthiness, excluding group and government support, which is on par with Korea Electric Power Corporation and major domestic capital companies.
With this Moody’s credit rating achievement, Lotte Rental expects its overall borrowing costs to decrease. The company sees this as a foundation for securing foreign funds and plans to continuously enhance its financing competitiveness.
A representative from Lotte Rental stated, “The acquisition of the Moody’s credit rating signifies recognition of our fundamental strength and stability by a global rating agency. Based on this result, we will strengthen our financing competitiveness to attract overseas investors and strive to provide better services to our customers.”
Lotte Rental is the only comprehensive rental company in Korea, featuring a full lineup of automotive services, from the No. 1 car rental brand in Korea, Lotte Rent-a-Car, to the car-sharing service Green Car, used car auction platform Lotte Auto Auction, and vehicle management specialist Lotte Auto Care. It recorded a revenue of 2.7523 trillion KRW and an operating profit of 305.2 billion KRW in 2023.
Written by Lee Sang-jin daedusj@aurodiary.kr