Global credit rating agency Moody’s on Friday revised up South Korea’s credit rating outlook from ” stable” to “positive.”
Sovereign credit rating for the South Korean economy stood unchanged at “Aa3,” the fourth highest in Moody’s rating measurement.
Moody’s cited three reasons for the upgraded outlook, including improved management of public corporation debt, reduced vulnerability to global market turbulence and ongoing track record of fiscal prudence.
“Recent policy measures have started to gain traction in improving the operational efficiency and reducing the debt burden of non-financial state-owned corporations,” Moody’s said in a statement.
The country’s public corporation debts have risen, since the global financial crisis, to 36.6 percent of GDP in 2013. The rating agency forecast that the ratio would fall below 30 percent by 2017.
It also said corporate and banking-sector reliance on external funding has reduced in the country on macro-prudential regulatory measures and improved risk management.
Short-term external debts by banks and companies have reduced to 115 billion U.S. dollars as of the end of 2014 from 190 billion dollars in September 2008.
South Korea has a strong fiscal position, leaving a relatively large room for policy space to cope with external shocks and contingent domestic risks, the rating agency said. Enditem