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N. Korea's power transfer may dent South's credit rating: S&P

All Headlines 16:46 October 12, 2010

SEOUL, Oct. 12 (Yonhap) -- The recent father-to-son power transfer in North Korea could have a negative impact on the sovereign rating of the South due to its potential risks on Asia's fourth-largest economy, a senior executive of Standard & Poor's (S&P) said Tuesday.

North Korea's leader Kim Jong-il recently promoted his youngest son Kim Jong-un to the No. 2 position at the communist country's all-powerful military committee in what is believed to be a path to make the junior Kim the new leader.

"One of the things our sovereign analysts are saying is that the instability in the North could impact South Korea clearly in its economic conditions," S&P President Deven Sharma said at the World Knowledge Forum held by local media.

"Either if there is instability in the North in terms of security risks or the reunification materializes, it will have an impact on the rating," Sharma said.

The credit appraiser holds the South's rating at "A," the sixth-highest investment grade, since raising it by one notch in 2005.

S&P retains the current rating two notches below the mark it gave the country before the Asian financial crisis in 1997-98, citing heavy geopolitical risks stemming from the North Korean factor.

pbr@yna.co.kr
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