Global credit rating appraiser Moody 's upgraded on Tuesday its issuer and senior unsecured bond ratings on Hyundai Motor and its affiliate Kia Motors to Baa1 from Baa2, citing strong profitability, financial healthiness and improved brand recognition.

"The rating action on Hyundai primarily reflects the continued improvement in its financial profile, profitability, brand recognition and global presence," Chris Park, senior credit officer at Moody's in Hong Kong, said in a press release.

Park noted that Kia's upgrade factored in the close linkage with Hyundai, saying that Hyundai will highly likely offer financial support to Kia under a distressed scenario.

Hyundai's operating profit grew 3.1 percent on-year to 2.06 trillion won (1.89 billion U.S. dollars) in the third quarter thanks to brisk overseas sales that offset production disruption in local factories caused by labor strikes. Kia's operating profit for the third quarter increased 4.1 percent to 861.2 billion won.

Moody's forecast that global sales volume at Hyundai will expand around 7 percent in 2012 compared with the previous year despite the labor disputes, saying that Kia will record robust sales performance this year as well.

The rating agency expected Hyundai and Kia to slightly increase their global market positions over the next couple of years in view of the continued improvement in brand power, saying that Hyundai and Kia will maintain high profitability over the next few years due to the robust sales performance and expected increase in average selling prices.

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