Fitch drops Hyundai, Kia to junk

Fitch Ratings said it downgraded Hyundai Motor Co.'s and Kia Motors' long-term foreign-currency issuer default ratings to BB+ from BBB- and the short-term ratings to B from F3.

The outlook has been revised to negative from stable.

The global auto industry faces unprecedented challenges with auto demand in major markets contracting at a larger and quicker scale than earlier anticipated, Fitch said.

Hyundai and Kia have fared better than their competitors as rising sales in emerging markets have compensated for the decline in the developed markets, the agency said.

However, as the economic slowdown has been spreading into the emerging markets, auto demand in these markets started to show signs of weakness in late 2008, Fitch said.

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