Moody's upgrades S. Korea's outlook to 'positive'

A global rating agency Friday upgraded South Korea's credit rating outlook to "positive" from "stable" and retained its sovereign rating of "Aa3," citing "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, adding that "this development is important because of the public policy role of these corporations and because their debt is a large contingent liability on the government's otherwise strong balance sheet."

However, the agency said, concerns over rising household debt remain "salient."

But such debt is manageable and does not pose immediate risks to the banking sector or to the government's balance sheet, it said.

"However, a further unchecked rise in household debt would likely dampen Korea's long-term growth prospects," Moody's said.

Park Sae-jin swatchsjp@ajunews.com

Moody's upgrades S. Korea's outlook to 'positive'

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