S & P likely to Upgrade Korea`s Credit Rate

The US credit rating agency, Moody`s Investors Service`s sovereign rating team, will visit Korea on 20th in order to conduct an onsite review of Korean economy, announced the Ministry of Finance and Economy yesterday.

Moody`s evaluation team will visit the Financial Supervisory Commission of the Ministry of Finance and Economy and the Bank of Korea and Korea Development Institute (KDI), and they will carry out the assessment on the Korea`s economy. Moody`s evaluation team is comprised of three analysts including Thomas J. Byrne, a vice president, and a senior analyst.

Moody`s had previously downgraded Korea`s credit rate three times during the money crisis, from Nov. 28, 1997 to Dec. 21. At the time Korea was rated as Ba 1 status which was downgraded by 6 ranks. And Moody`s had upgraded from Baa3 status in Feb. 12, 1999 to Baa2 status in Dec. 16 last year.

Meanwhile, Salomon Smith Barney (SSB), the US investment bank, prospected that Standard and Poor`s(S & P) will upgrade Korea`s credit rate from BBB to BBB+ in the third quarter of this year. Dr. Joanna Chu of SSB predicted the upgrade of Korea`s rating, saying that ``Korea`s economy will stabilized at the first half, and will begin to recover from the second half of this year.``

Dr. Chu evaluated that ``The US economy is expected to recover due to the lowered interest rate by the US Federal Reserve Board. The recovery of the US economy will have a positive effect on the Asian countries whose economies are highly dependent on the exports to the U. S.. Although the problem of insolvent enterprises still remains in Korea, the restructuring of companies are being steadily undertaken.``

But Dr. Chu expressed the negative opinion toward Malaysia. S & P will upgrade Malaysia`s rating from BBB, but the upgrade will not be this year, but next year, she said.

Kwon Soon-Hwal shkwon@donga.com