Moody's retains S. Korea's 'A1' credit rating

SEOUL, July 28 (Yonhap) -- Moody's Investor Service maintained Wednesday its "A1"
sovereign credit rating for South Korea and "stable" credit outlook, citing the
country's robust economic recovery and resilience to fragility of developed
economies.
"Asia's fourth-largest economy has shown very high strength due to its
competitive export industries and relatively healthy corporate and banking
sectors," Moody's said in its annual analysis report on South Korea.
"Even euro-zone debt concerns and slowing U.S. and Chinese economies have not
impaired the country's fiscal and monetary normalization from crisis modes," the
global credit rating agency added.
The latest assessment comes after Moody's upgraded in April South Korea's
sovereign rating by one notch to A1, the fifth-highest investment grade.
Other countries in the same credit rating range as South Korea include China,
Czech Republic, Portugal and Slovakia, the company said.
"There was no blowout of the fiscal deficit last year, unlike with many other
highly-rated governments, and dent remains at a moderate level," said Tom Byrne,
a Moody's senior vice president in the report.
South Korea's economy grew 7.2 percent on-year in the April-June period on robust
exports and improved consumer spending, a result in line with market
expectations.
However, geopolitical risks heightened by the March sinking of a South Korean
warship blamed on North Korea are feared to set off uncertainties for a while
although it isn't an immediate limit to the country's rating, the firm said.
"North Korea's sinking of a South Korean warship in March likely signals a period
of heightened tensions ahead, while dynastic leadership transition and economic
disintegration in the North add to the uncertainty," Byrne said.
"However the robust state of the Korea-US military alliance and China's interest
in stability on the Peninsula will deter Pyongyang from taking even more reckless
provocations, possibly leading to war," he noted.
South Korea accuses North Korea of attacking the 1,200-ton Cheonan with a torpedo
near the disputed inter-Korean sea border on the Yellow Sea on March 26, killing
46 sailors. Pyongyang denies any involvement in the incident.
pbr@yna.co.kr
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