Moody's affirms South Korea

Moody's Investors Service said it affirmed its current A3 long-term ratings with a stable outlook on the government of South Korea, noting that progress has been made in the six-party nuclear negotiations, but that a clarification of North Korea's commitment to the joint statement of the fourth round of the talks would be necessary to assess how geopolitical developments may affect South Korea's outlook.

Moody's said that positive steps on the part of North Korea could, if followed through on, lead it to a change in South Korea's outlook from stable to positive, or to placing South Korea's A3 rating on review for possible upgrade.

The agency noted those steps seemed to be at hand when a set of principles was signed that committed the six nations to the goal of "a verifiable denuclearization in a peaceful manner," which was overshadowed by a subsequent statement delivered by the North Korean Foreign Ministry, indicating that the North has apparently backtracked, demanding the immediate right to a "peaceful" nuclear program before dismantling its weapons program.

The agency said this seems not only to contradict the 11th-hour compromise made to close this round of negotiations, but also appears to undermine that country's commitment to "abandon all nuclear weapons and existing programs."

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