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Summary Moody's upwards its outlook on South Korea's credit rating to positive.
Moodys on Monday revised upwards its outlook on South Koreas sovereign credit rating to positive, citing the countrys strong and improving fiscal fundamentals.Koreas fiscal fundamentals are very well placed among its like-rated advanced and emerging economy peers, Moodys Investors Service said in a statement. Its fiscal fundamentals have withstood the global financial crisis, as well as the ongoing eurozone crisis and the drag in global growth.The agency raised the outlook on South Korean government bonds to positive from stable and affirmed the countrys long-term foreign-currency rating at A1.It said government debt has been kept at a moderate level in relation to gross domestic product, and the outlook for state finances was favourable.Relatively low inflation, a low-risk premium on government securities and a relatively strong outlook for economic growth meant that fundamental pressures on government debt capacity were absent.Moodys also said vulnerabilities exposed during the height of the global financial crisis the banking systems reliance on offshore dollar funding were being effectively addressed. But rising household debt was a concern, it said.If unchecked, this trend could impair bank asset quality and introduce a drag on private consumption expenditure as an important source of GDP growth, Moodys said. The agency said event risks related to North Korea were factored into its latest assessment and did not constrain the A1 rating. The North has been persistently hostile to the Souths current conservative government. It plans a satellite launch around the middle of this month which is seen by the United States and its allies as a disguised missile test.
