S&P upgrades Korea

S&P said it raised the long-term sovereign credit rating on the Republic of Korea to AA from AA- and affirmed its short-term rating at A-1+.

S&P also said it revised the transfer and convertibility assessment for Korea upward to AAA from AA+.

The outlook is stable.

The upgrade reflects an assessment that Korea's strong record of steady growth has generated a prosperous economy, greater fiscal and monetary flexibility and continual improvements in external metrics, S&P explained.

Although Korea's GDP growth in the next three to five years will be slower than its growth before the 2008 global financial crisis, the agency said it believes its prospects are superior to those of most developed economies.

The reduction of short-term external bank debt and persistently large trade balances strengthened Korea's external metrics, which also enhanced the sovereign's credit quality, S&P added.

The ratings also consider the country's favorable policy environment, sound fiscal position and net external creditor position, the agency said.

Significant security risks and contingent fiscal liabilities partly offset these strengths, S&P said.

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