Moody's upgrades Korea

Moody's Investors Service said it upgraded the Republic of Korea's government bond rating to Aa3 from A1.

The outlook is stable.

The action reflects the country's strong fiscal fundamentals, high degree of economic resilience and competitiveness, reduced external vulnerability of the banking sector and continuation of the status-quo in North-South geopolitics, according to the agency.

The recent intensification of the economic weakness in the eurozone and the slowdown in China's growth is hurting Korea's exports, a key growth driver, the agency said.

Concerns over the rise in non-financial public-sector debt since 2007 are being allayed by recent policy actions, although effective management of public corporation liabilities remains a concern, Moody's added.

Concerns over rising household debt remain salient but it does not pose near-term risks to the banking sector, or to the government's balance sheet, if it is contained, the agency said.

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