Moody’s: Korea's rating to be stable next year

Moody’s: Korea's rating to be stable next year. November. 23, 2016 07:22. by Gun-Huk Lee gun@donga.com.

Korea’s sovereign rating is unlikely to be affected by the ongoing political scandal in the short term, credit rating agencies said.

Moody’s, a global credit rating agency, and Korea Investors Service, a local credit rating agency, expected that the Korean economy will be stable despite the influence-peddling scandal involving Choi Soon-sil, the president’s confidante, at the 2017 Korea Credit Outlook Conference at Conrad Hotel in Yeouido, Seoul, on Tuesday. Michael Taylor, Moody’s managing director in charge of the Asia Pacific region, said that the scandal is unlikely to have an impact on the Korean economic governance as the economic system is working and the financial authorities are playing their role. Moody’s upgraded Korea’s sovereign rating to Aa2 with a stable outlook in December last year and has maintained this.

Moody’s also saw that the credit ratings of Korean financial institutions and corporates will remain stable despite the growing uncertainty in the global economy due to U.S. President-elect Donald Trump.

As for restructuring in shipping and shipbuilding industries, the rating agency said, “As the exposure is concentrated on state-owned policy banks and has been incorporated in their credit rating, it would have a limited impact on commercial banks.” It added that Korea has geopolitical risk due to North Korea’s nuclear tests and growing unemployment and slowing consumption needs to be noted.