Moody’s Investor Service raises Korea’s government bond ratings
Apr 15, 2010
International credit ratings, research and risk analysis agency Moody’s has raised Korea’s government bond ratings to A1 and this is the first improvement in the last 14 years, since 1996.
The Ministry of Strategy and Finance announced that Moody’s rating committee had held a meeting and upgraded Korea’s credit rating from A2 to A1 on the 14th.
With this move, Korea’s credit rating has recovered to its previous level, before the turbulence of the global financial crisis, and this is the first recovery recognized by the three large credit agencies. Moody’s explained that the main reason for the rise is due to the rapid and effective financial and economic strategy that caused the economy to bounce back rapidly..
Moody’s said that maintaining a moderate debt level in the international accounts, decreasing short-term foreign debt and expanding the country’s foreign reserves to US 270 billion dollars enabled a this positive result.
It went on to say that any possible tension between North and South Korea did not affect the raised rating due to a strengthened Korean-American relationship and China’s increased role in maintaining stability in Korea.
Vice Finance Minister Kyung-wook Hur announced that “this lifted credit rating is a significant achievement during a time of economic downturn.” Recently, even the developed countries’ credit ratings have been lowered due to the global recession, but Korea’s rating has been increased, which implies that the Korean government’s successful corresponding strategy has been internationally recognized.
In particular, the stable market even at the time of the sinking of the Korean naval ship the Cheonan was highly valued.
Minister Hur says that “In addition, this was also a confirmation that North Korea’s nuclear weapons tests and issues of the leadership succession did not negatively influence the national credit rating, at least for now.”
The new rating will positively affect the future of Korean businesses and financial institutions and a decrease in the national risk level will cause an increased international confidence level as well, which is expected improve conditions for Korean businesses and financial institutions, and will attract more foreign investors.
by Jiwon Son
Korea.net Staff Writer
Department Global Communication and Contents Division