Fitch maintains sovereign ratings on S. Korea despite Pyongyang's nuke test
Published : 2013-02-14 14:02
Updated : 2013-02-14 14:56
Global credit appraiser Fitch Ratings said Thursday that it maintains its sovereign ratings on South Korea despite heightened geopolitical tension following the recent nuclear test by North Korea.
The credit ratings agency also said it maintains its rating outlooks at "stable."
Last September, Fitch raised the ratings on South Korea from "A+" to "AA-," the fourth-highest of its rating system, and has maintained the level ever since.
North Korea conducted its third nuclear test on Tuesday in defiance of the international community's outcry condemning the North's December long-range rocket launch. Pyongyang previously detonated nuclear devices in 2006 and 2009.
"Fitch's upgrade of the Republic of Korea's ratings to AA-/stable in September incorporated an assessment that geopolitical risks associated with North Korea cannot be entirely discounted but are not consistent with a AA- rating," the agency said in the email.
"The recent apparent nuclear test by the North does not materially affect this assessment. Fitch continues to judge that the risk of a military conflict or a sudden collapse of the North remains small and hence does not have implications for South Korea's current ratings," it added.
The ratings agency also said that South Korea's current ratings are supported by "moderate" public debt, "well-entrenched" fiscal discipline and "resilient" macroeconomic performance, among other things.
South Korea is now keeping its communications line open to the three major credit rating agencies -- Fitch, S&P and Moody's -- in a bid to ease market jitters by emphasizing that the North's nuclear test will have a limited impact on its economic and financial markets, the finance ministry here said.
Last year, S&P upgraded its sovereign ratings on South Korea by one notch, citing eased geopolitical risks from North Korea, while Moody's also hiked their ratings on Korea. (Yonhap News)