ajosshi
Joined: 17 Jan 2011 Location: ajosshi.com
|
Posted: Thu Sep 06, 2012 3:15 pm Post subject: SK Rating Raised by Fitch on Stability Amid Global Turmoil |
|
|
S. Korea Rating Raised by Fitch on Stability Amid Global Turmoil
South Korea�s debt rating was upgraded by Fitch Ratings to AA-, the same as Saudi Arabia and one level higher than Japan and China, 10 days after a similar move by Moody�s Investors Service.
�It is an important vote of confidence for Korea�s safe haven status, which could strengthen the appreciation bias of the Korean won,� said Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore. �We expect more inflows from sovereign wealth funds.�
The decision yesterday is the second in less than two weeks to cite South Korea�s relatively strong position to cope with financial turbulence. South Korea�s sovereign debt rating was raised by Moody�s one step to Aa3 on Aug. 27, the same ranking as China and Japan, citing the country�s �strong fiscal fundamentals� that allow room to cope with domestic risks and external shocks.
�Two out of three major credit rating agencies moved Korea up when so many have been downgraded in Europe,� said Jun Min Kyu, an economist at Korea Investment & Securities Co. �This raises the possibility of S&P to follow.�
While Moody�s and Fitch now have South Korea on their fourth highest rating, Standard & Poor�s ranks the nation at A, its sixth highest.
The won has strengthened 0.1 percent since the Moody�s upgrade, to 1,133.85 yesterday. The Fitch upgrade was announced after local financial markets closed.
�Financial Stability�
�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 yesterday�s statement. �It also takes into account strong structural fundamentals including an income level and social and political stability that are not out of line with the �AA� rating range.�
Bond-market history indicates that the utility of sovereign ratings may be limited. Almost half the time, yields on government bonds fall when a rating action by S&P and Moody�s Investors Service suggests they should climb, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back as far as the 1970s.
After S&P stripped France and the U.S. of AAA grades, interest rates paid by the countries to finance their deficits dropped rather than rose.
http://www.bloomberg.com/news/2012-09-06/s-korea-rating-raised-by-fitch-on-stability-amid-global-turmoil.html |
|