Lotte Rental earns investment-grade rating from Fitch, bolstering overseas funding options

Lotte Rental has received an investment-grade credit rating from global rating agency Fitch for the third consecutive year, recognition of its stable business foundation and asset quality that is expected to further expand the company's access to overseas funding.

Lotte Rental announced Tuesday that Fitch reaffirmed its long-term credit rating at BBB-, an investment-grade designation, with a stable outlook.

In its assessment, Fitch cited Lotte Rental's strong market position, stable business structure and sound asset quality as the primary grounds for the rating. The agency particularly noted that the average provisioning ratio against rental and lease assets held at just 0.2 percent from 2022 through last year, and credited the company's steady management of vehicle residual value risk.

Lotte Rental also maintained an investment-grade Baa3 rating from Moody's — another global credit rating agency — for the third consecutive year in March. Fitch's BBB- is equivalent to Moody's Baa3, placing Lotte Rental at the same level as global automaker Ford. Under domestic credit rating standards, the rating corresponds to a range of AA+ to AA-.

With the Fitch rating reaffirmed, Lotte Rental said it is better positioned to access global capital markets, including through overseas bond issuances. The company plans to diversify its funding channels and strengthen its financing competitiveness on the back of the sustained investment-grade standing.

The company's earnings have also been on a steady upward track. Lotte Rental posted sales of 2.9188 trillion won (approximately $1.89 billion) and operating profit of 312.5 billion won last year, up 4.5 percent and 9.7 percent, respectively, from the previous year. In the first quarter of this year, consolidated sales reached 730.9 billion won and operating profit came in at 83.6 billion won, gains of 6.6 percent and 24.8 percent, respectively.

Lotte Rental operates a portfolio centered on its core Lotte Rent-a-Car brand, alongside car-sharing service Lotte Rent-a-Car G car, used-car retail platform T car, used-car auction house Lotte Auto Auction and vehicle management specialist Lotte Auto Care. Portfolio restructuring focused on the core rental business, combined with expanded asset disposal channels including used vehicles, has driven improvements in profitability.

"The maintenance of our Fitch credit rating is highly significant in that a global rating agency has positively assessed Lotte Rental's fundamental strengths and stability," a company official said. "Building on this result, we will work to further expand our funding base — including by attracting overseas investors — so that we can provide better service to our customers."