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N.K. leader's death not to seriously affect S. Korea's rating

All Headlines 16:44 December 19, 2011

SEOUL, Dec. 19 (Yonhap) -- Global rating agencies said Monday that the death of North Korean leader Kim Jong-il would not immediately affect ratings assigned to South Korea despite increased market uncertainties and geopolitical risks.

According to Seoul's finance ministry, Standard & Poor's, Moody's Investor Service and Fitch Ratings said they would not adjust ratings on South Korea given its strong economic fundamentals and the soundness of the financial sector.

S&P said last week it maintains the credit rating on South Korea at "A," the sixth-highest level, and also maintained the country's credit outlook at "stable."

Moody's Investor also retains its sovereign rating on South Korea at "A1," and Fitch Ratings in November upgraded its rating outlook for South Korea's sovereign debt to "positive" from "stable," confirming its credit rating for South Korea at "A plus," its fifth-highest level.

Kong Dong-lak, an analyst at Torus Securities in Seoul, said it seemed there were no chaotic moves in North Korea in the wake of Kim's death, which suggests a smooth power transition in the communist state.

Experts said the aftershock of Kim's death could lead to ratings adjustment, however, if military clashes between the two Koreas take place or the power succession in the communist state becomes chaotic.

Fitch Ratings said the situation with the North could be a potential source of downside risk. "For now, it's much too early to say risks have materially increased, but clearly we will keep the situation under close review," the rating agency said in a statement.

It had said earlier that the impact of a war with North Korea or a possible collapse of its regime on South Korea's economy could be serious, but chances were not high that such incidents would occur.


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