Korea’s sovereign credit rating stable despite martial law chaos: rating agencies

Global credit rating agencies have assessed South Korea's sovereign credit rating as stable, despite political and economic chaos sparked by President Yoon Suk Yeol’s short-lived martial law declaration, according to the Finance Ministry.

Amid rising concerns about the country maintaining its high sovereign credit rating in the face of the political fiasco, Deputy Prime Minister and Finance Minister Choi Sang-mok held a videoconference with high-ranking officials from global credit rating agencies at the Government Complex Seoul on Thursday.

"What matters the most for a credit rating agency is that Korea's national system operated well despite the recent events," said Roberto Sifon-Arevalo, managing director and head of analytics & research at S&P Global, according to the ministry.

In April, S&P kept its long-term sovereign credit rating for Korea at AA, the third-highest rating, unchanged since August 2016.

"The swift market stabilization measures enforced by the financial authorities such as the Finance Ministry and the Bank of Korea show how strong the country's economic system is," Sifon-Arevalo said.

Marie Diron, global head of Moody's Sovereign and Sub-Sovereign Risk Group, echoed the view. Moody's has maintained the country's sovereign credit rating at Aa2, the third-highest level on the company's table, since December 2015.

"Concerning the recent situation, the downward risks related to the Korean economy are unlikely to materialize," Diron said, adding that recent events reaffirmed Korea's high credit rating is backed by solid constitutionalism.

James Longsdon, global head of sovereign and supranational ratings at Fitch Ratings, sided with the two other officials. Fitch has maintained the level of AA- for Korea, the fourth-highest level on its sovereign ratings table, since September 2012.

"Considering Korea's sovereign credit rating remained intact despite the past impeachment, the current incident is not at of a level to threaten the country's rating," Longsdon said.

Choi pledged to defend the country's economy, mitigating the impact of the ongoing political strife on the capital market.

“The impacts of the past two presidential impeachments on the economy were limited,” Choi said, referring to Park Geun-hye, who was the first sitting president in South Korea to be impeached and removed from office in 2016, and former President Roh Moo-hyun whose impeachment motion was ultimately rejected at the Constitutional Court.

He added the government will make sure foreign investors can execute investment and management activities stably without difficulties.