S&P to Leave Sovereign Risk Rating of Seoul Unchanged

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S&P to Leave Sovereign Risk Rating of Seoul Unchanged

The international credit rating firm Standard & Poor's indicated Monday that it would not raise Korea's sovereign credit rating this year. A representative of the credit rater, Robert Richards, said at a press conference in Seoul that the firm would be able to determine whether to raise Korea's sovereign credit rating after the second half of the year, when a massive amount of debts mature.

Mr. Richards said that now it can only wait and watch the results of Korea's efforts to establish market principles. Although Korea's corporate and financial restructurings have shown progress, he said, progress may seem better than it is because other crisis-hit Asian countries are "doing really badly."

He cautioned that many practices of Korea's financial and corporate sectors still fall short of the expectations of international investors, including credit extensions based on corporations' images, emphasizing growth over profitability and a lack of transparency.

Seoul has shown strong determination toward reform, which is positive, Mr. Richards said. But he warned that the government may cause problems by intervening in the affairs of individual companies, "such as providing liquidity to Hynix Semiconductor Inc." He stressed that the government should provide a predictable economic system and effective conflict settlement systems.

Regarding the proposed sale of selling Daewoo Motor to General Motors, Mr. Richards said it is useless to think that the car company could obtain a "proper price" if it holds its ground. He said a fast resolution is best for Daewoo's productivity and boosting Korea's competitiveness.

by Rah Hyun-cheol

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