Global rating firms predicted Monday that the death of North Korean leader Kim Jong-il would not lead to a downgrade of South Korea’s credit rating.
Moody’s Investors Service said that the economic fundamentals of Seoul would not change with Kim’s death.
“We will continue to rate South Korea on the basis of its economic, institutional and government financial fundamentals,” a senior vice president at Moody’s in Singapore was quoted by a Chinese news provider as saying.
He said these would not change on account of Kim’s death.
Moody’s also said the potential risks such as a collapse of North Korea or an outbreak of war between the two Koreas seemed remote, even under the current uncertainty about the leadership transition in Pyongyang.
The U.S. rating firm rates South Korea as A1 with a stable outlook.
Standard & Poor’s Ratings Services said a “smooth leadership transition” in the North wouldn’t affect the credit rating of the South.
“Our ratings take into account possible, temporary disruptions in security risks,” an S&P researcher in Singapore was quoted by an online news provider as saying.
“As long as it is temporary, there is no impact. The main thing we are looking for now is smooth succession,” he said.
If succession isn’t smooth and it results in either a security situation or the collapse of the North Korean regime, then there would be some “negative impact” on South Korean ratings, he said.
Fitch Ratings said the death of Kim was not a ratings trigger in itself for South Korea.
“However, clearly it gives rise to additional uncertainty and we will keep the situation under close review,” it said through an e-mail statement.
Concerning the simultaneous plunge in Asian stocks following his death, a research analyst of Shinhan BNP Paribas said what investors don’t like most is uncertainty.
By Kim Yon-se (
kys@heraldcorp.com)
