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Alexander Hamilton Awards

Big Changes to Capital Structure Drive Corporate Competitiveness

Congratulations to Hyundai Capital America, winner of the 2019 Gold Alexander Hamilton Award in Treasury Transformation!

Hyundai Capital America (HCA) finances purchases of Hyundai and Kia vehicles across the United States. The business has grown rapidly over the past decade along with sales of Hyundai- and Kia-branded cars. For HCA, this growth led to a heavy reliance on debt and stretched the company’s capital structure toward the upper limits of internal targets for debt-to-equity leverage.

“The perception of the quality of our brands has reached an inflection point since the financial crisis, and our business has grown in lockstep with those brands,” says Frank Boroch, director of treasury for HCA. “That has been tremendous, but because borrowed money is the raw ingredient for the finance division, we were pounding the pavement looking for organizations willing and able to lend to us on a repeat basis and at the lowest rate possible.”

Moreover, the company historically had utilized mostly asset-backed financing. The debt required HCA to pledge plain vanilla assets whose risk profile would be straightforward for lenders to analyze. This reduced the company’s ability to innovate with new financing products for auto buyers and constrained its operational flexibility.

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Meg Waters

Meg Waters

Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.

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