Lotte Rental achieves 'Baa3' credit rating from Moody's

By Park Sae-jin Posted : March 26, 2024, 09:56 Updated : March 26, 2024, 09:57
Gettyimages Bank
[Gettyimages Bank]

SEOUL, March 26 (AJU PRESS) -- Lotte Rental, the rental service wing of South Korea's Lotte Group, has earned a prestigious "Baa3" investment-grade rating from Moody's, a renowned global credit rating agency. This achievement holds significance in South Korea's rental industry. Moody's is recognized as one of the top three credit rating agencies globally, alongside Standard & Poor's (S&P) and Fitch.

Moody's evaluation of Lotte Rental began in December, focusing on financial performance, business operations, and management credibility. Following a comprehensive assessment, Moody's finalized its decision.

Moody's commended Lotte Rental's domestic operational efficiency, strong financial performance, and robust financial metrics. For instance, Lotte Rental reported an EBITDA (earnings before interest, taxes, depreciation, and amortization) of approximately 1.38 trillion won (about $1 billion) in 2023, with an interest coverage ratio of 2.2 times.

EBITDA, reflecting pre-tax and pre-interest earnings, demonstrates a company's actual cash flow, while the interest coverage ratio measures its ability to meet interest expenses with operating cash flow.

This marks Lotte Rental's first credit rating from an international agency. Moody's Baa3 rating places Lotte Rental alongside major companies like Tesla in the US and SK Innovation in South Korea.

Baa3 corresponds to AA+ and AA- ratings by South Korean agencies. Even with an independent credit rating, excluding group and government support, Lotte Rental received a Baa3 rating that is similar to Korea Electric Power Corporation (KEPCO) and other major South Korean companies.

With the Moody's credit rating, Lotte Rental aims to reduce borrowing costs and enhance fundraising competitiveness, including attracting overseas investors.

"Obtaining this credit rating from Moody's signifies recognition of Lotte Rental's stability and financial strength. We will leverage this acknowledgment to attract global investors and enhance service delivery," a Lotte Rental official told Aju Korea Daily on Monday.

Lotte Rental, South Korea's leading rental company, offers diverse automotive services, including car rentals, car-sharing, used car auctions, and vehicle management. As of 2023, Lotte Rental recorded sales of approximately 2.7 trillion won and an operating profit of about 305.2 billion won.
기사 이미지 확대 보기