S&P forecast for Korea upgraded to ‘positive’

Standard & Poor’s, one of three major international credit rating agencies, upgraded its forecast for Korea yesterday for the first time in two years, raising it from “stable” to “positive.”

The organization kept the country’s credit rating at A+. In September 2012, S&P raised its rating from stable A to stable A+.

“Korea’s economic performance in recent years has been stronger than that of economies at similar income levels, which has augmented sovereign credit support,” the agency said in a report. “The ratings on Korea reflect its favorable policy environment, sound fiscal position and broadly balanced external liability position. Significant security risks and contingent liabilities offset these strengths.”

Giving a “positive” forecast raises the possibility of another upgrade in six to 24 months, said the Ministry of Strategy and Finance.

Fitch adjusted its forecast for Korea to “positive” in November 2011 and raised its rating from A+ to AA- 10 months later. Moody’s followed suit in 2012. If S&P moves to increase its rating from A+ to AA-, it would be the first time Korea has ever had AA ratings from all three agencies.

But the agency also pointed out the chief weaknesses in Korea’s credit fundamentals are contingent liabilities and geopolitical risks on the Korean Peninsula.

BY song su-hyun [ssh@joongang.co.kr]