Fitch ups Korea’s rating to AA-

Fitch ups Korea’s rating to AA-

Fitch Ratings, dual-headquartered in New York and London, elevated Korea's credit rating to AA- on Thursday. By Kim Tong-hyung Ratings agency Fitch elevated Korea’s credit rating to a par with Saudi Arabia and a notch above China and Japan, Thursday, citing the country’s economic strength and the stability of its financial market. The decision to raise the country’s long-term foreign currency issuer default rating (IDR) from ``AA-“ to “A+” came just weeks after Moody’s, a rival agency, elevated its rating on Korean government bonds from A1 to AA3. ``The upgrade reflects Korea's continued economic and financial stability in a volatile global environment and a strong macroeconomic policy framework including sustained fiscal discipline,’’ Fitch said in a statement. ``It also takes into account strong structural fundamentals including income levels and social and political stability.’’ As with Moody’s upgrade, Fitch’s decision came as a relief to Korean policymakers, who have been desperate for good news because they continue to struggle to cope with a blizzard of bad data on exports, consumption and household debt. Although Korea’s export-dependent economy has been rattled recently due to worsening global conditions, Fitch observed that the country’s economic stability is buttressed by the scope of monetary and fiscal policy flexibility. "Korea's ability to sustain fiscal prudence and to lower the general government debt-to-gross domestic product ratio would support the sovereign's ratings and help to head off longer-term fiscal pressure associated with population ageing. In contrast, a sharp deterioration in the banking sector's liquidity or asset quality, given the high degree of exposure to both leveraged households and small and medium-sized enterprise sectors, would be a negative development for Korea’s ratings,’’ Fitch said