Moody’s raises S.Korean credit rating

Moody’s rating agency on Monday raised the outlook on South Korea’s sovereign credit rating to positive from stable, citing strong and improving fiscal positions and an easing external vulnerability of the banking sector. Moody’s Investors Service currently rates South Korea at A1, the fifth highest and equivalent to an A-plus rating from its two main rivals, Standard & Poor’s Ratings and Fitch Ratings. It last raised the country’s rating in April 2010. Analysts said the outlook change was a vote of confidence to the way Asia’s fourth-largest economy is managed and would improve global appetite for South Korean assets, including the won and stocks. “The ratings upgrade is a vote of confidence reflecting solid fundamentals and while it is not the kind of news that has caught anyone by surprise, it sets the won a solid base,” said So Jae-yong, economist at Hana Daetoo Securities. The won briefly extended gains to hit a near two-week high of 1,126.8 per dollar, although it retreated slightly. Bond futures and stock prices showed a muted reaction. “Its fiscal fundamentals have withstood the global financial crisis, as well as the ongoing euro-zone crisis and the drag in global growth,” Moody’s said in a statement.