Global credit ratings agency Standard & Poor’s said Tuesday that it has affirmed its sovereign credit rating for South Korea at “A plus,” citing the country’s “favorable” policy environment and “sound” fiscal position.
The rating is the agency’s fifth-highest level. The agency also retained its long-term rating for South Korea at “stable,” according to its emailed statement.
“The rating on Korea reflects its favorable policy environment, sound fiscal position and broadly balanced external liability position,” the agency said.
Standard and Poor’s praised in particular the government’s policies that have contributed to promoting economic development and stabilizing its domestic economy in the face of several global crises of late.
It also credited the government for keeping its fiscal status in good shape, saying that its “healthy fiscal position is another support for its creditworthiness.”
The agency still cited geopolitical risks stemming from North Korea as a “chief” weakness. It also worried about a huge cost that could incur in the event of a regime collapse in the North and the subsequent reunification process.
“(South) Korea faces the prospects of bearing the uncertain, but likely heavy, costs of a reunification if the North Korea region fails,” S&P said.
“Heightened public perceptions of the risks of an inter-Korean military conflict have also generated temporary volatility in Korea’s economy and financial system,” it added.
S&P’s ratings echoed those of two other major credit appraisers Fitch and Moody’s, which recently affirmed their sovereign ratings on South Korea at “AA minus” and “Aa3,” respectively. They also kept long-term rating outlooks at “stable.” (Yonhap News)
S&P has maintained its rating on South Korea at the current level since September last year when the agency upgraded it by one notch, citing reduced geopolitical risks from the North among other factors.
“We could raise the ratings if risks from North Korea ease materially or if economic growth accelerates substantially,” the agency noted. (Yonhap News)
