Foreign credit rating agencies to open in Korea in June

Foreign credit rating agencies such as Moody`s of the United States will be allowed to do credit-related business through their subsidiaries in Korea from the end of June. Specific securities like corporate bonds without guarantees or asset backed securities (ABS) will be evaluated only by authorized credit evaluation agencies in order to protect investors.

To this end, the Ministry of Finance and Economy will prepare bills for enforcement decrees and rules on the Law on the Use and Protection of Credit Information with the aim of implementing them from Jun. 29, ministry officials said Sunday. According to the draft revision bill, foreign credit evaluation firms like the Moody`s and Standard and Poor`s (S&P) will be allowed to engage in business alone or through joint venture firms.

In order to raise the neutrality of the credit rating firms, the companies will be prohibited from evaluating corporate bodies which have shares of 10 percent or more of the credit firms or virtually govern them. Those who violate this rule will have their business suspended for up to six months.

Kwon Soon-Hwal shkwon@donga.com