Reuters: US Dollar Report: Fitch Rates Korea's Bond 'AA-(EXP)'

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Fitch Rates Korea's Bond 'AA-(EXP)' Sep 4th 2013, 03:53 Tue Sep 3, 2013 11:53pm EDT HONG KONG, September 03 (Fitch) Fitch Ratings has assigned Korea's upcoming USD-denominated global bonds an expected 'AA-(EXP)' rating. The final rating is contingent on the receipt of final documentation conforming to information already received. The expected rating is in line with the Republic of Korea's Long-Term Foreign Currency Issuer Default Rating (LT FCIDR) of 'AA-'. The sovereign's Long-Term Local Currency Issuer Default Rating (LT LCIDR) is 'AA'. The rating Outlooks are Stable. Key Rating Drivers Korea's ratings are underpinned by its fundamental strengths, which include a resilient economy and a robust macroeconomic policy framework in which sustained fiscal discipline and a flexible exchange rate remain intact. These factors leave Korea well positioned to cope with the risks of high household debt, and a volatile global economic and financial environment. Rating Sensitivities The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently well balanced. Consequently, Fitch's sensitivity analysis does not currently anticipate developments with a high likelihood of leading to a rating change. The main factors that individually, or collectively, could trigger positive rating action: - A material reduction in the general government debt/GDP ratio - A further sustained reduction in the vulnerability of the banking sector, for example by continuing to reduce the reliance on short-term external financing - A decline in the sovereign's contingent liabilities (e.g., lower state-owned enterprise debt) The main factors that individually, or collectively, could trigger negative rating action: - A sharp deterioration in the banking sector's funding position or asset quality, leading to a need for sovereign support - A household debt crisis, which impacts the economy through either a sharp decline in private consumption or a sharp rise in non-performing loans in the banking system and, consequently, leading to a deterioration in the sovereign's fiscal position - A decline in the economy's potential growth rate of 3.5%-4%, leading to significantly higher unemployment or broader economic and financial instability Contact: Primary Analyst Art Woo Director +852 2263 9925 Fitch Ratings 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Secondary Analyst Andrew Colquhoun Senior Director +862 2263 9938 Committee Chairperson Tony Stringer Managing Director +44 20 3530 1219 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Sovereign Rating Methodology', dated 13 August 2012, and 'Country Ceilings' dated 9 August 2013 are available at www.fitchratings.com. Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Link this Share this Digg this Email Reprints

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