S&P affirms Korea

Standard & Poor's said it affirmed the foreign- and local-currency sovereign credit ratings on the Republic of Korea at A/A-1 and A+/A-1, respectively.

The outlook is stable.

Ratings are supported by the nation's dynamic economy, sound fiscal position and sound external position, the agency said.

In recent months, the Korean financial system has faced intensifying pressures, the agency said. Due to the ongoing global liquidity squeeze, the nation's banks are facing increasing difficulty in refinancing their foreign currency requirements, the agency noted.

The cost of wholesale funding has been rising, and the duration of the banks' foreign-currency borrowing has been declining, S&P said, and domestic funding conditions have also become more challenging.

The agency said it expects stress on the Korean financial system to be prolonged but decisive policy measures to be put in place to ease domestic and foreign liquidity conditions.

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