Hyundai Motor Co., South Korea’s largest automaker, and its affiliate Kia Motors Corp., had their credit ratings upgraded one level by Moody’s Investors Service, citing the carmakers’ profitability and global reach.

Ratings on the senior unsecured bonds of the two Seoul- based automakers were raised to Baa1, the third-lowest investment grade, from “Baa2,” Moody’s said in a statement Tuesday. The outlook for the rating, which affects about $2.1 billion in debt, is stable, Moody’s said.

The higher credit rating may help reduce borrowing costs. Hyundai Motor and Kia will probably “increase their global market positions over the next couple of years,” Moody’s said in the statement.

The automaker sold $500 million of five-year bonds on Sept. 24, priced to yield 150 basis points more than Treasuries, compared with the 315 basis-point spread paid by the Seoul-based borrower on 5 1/2-year securities in December, Bloomberg-compiled data shows.

The ratings company expects Hyundai and Kia’s sales volume to grow about 7 percent this year, compared with an increase of about 4.4 percent in global demand, Moody’s said. (Bloomberg)