Moody`s Raises Korea`s Credit Outlook

The U.S. Moody`s Investors Service, which is one of the three top credit rating agencies in the world, raised Korea`s credit rating outlook by one notch from `Stable` to `Positive` at a temporary credit outlook rating committee meeting held on Nov. 30.

Accordingly, it is highly expected that Moody`s will upgrade Korea`s sovereign credit rating by one notch from the current `Baa2` to `Baa1`.

Moody`s explained, "The upgrade in outlook for Korea`s credit sovereign rating was made in recognition of the country`s exception stability in its external payments position and the government`s credible policy drive to prevent a recurrence of the financial crisis."

"In case of Korea, large investment capital inflows are being made into the securities market, Korea`s foreign debts are being diminished and its foreign currency reserves have risen to 100 billion dollars from less than 10 billion dollars during the time of the foreign currency crisis." Moody`s pointed out. "Sustained foreign private firms` advance to Korea will make a great contribution to an improvement in corporate governance and the prevention of moral decadence in public fields."

Moody`s also stated, "The Korean government has the will to push forward domestic reforms as well as to respond effectively to external challenges such as China`s rapid growth and Japan`s slump." and continued, "Korea can maintain investment growth and export competitiveness by keeping up flexibility in policy and continuing liberalization."

However, Moody`s also pointed out, "A further upgrade in Korea`s sovereign credit rating will be made only when financial and corporate restructuring is undertaken continuously and concretely."

Rae-Jeong Park sanjuck@donga.com