South Korea’s sovereign credit rating stable: S&P, Moody's, Fitch

South Korea’s sovereign ratings remain stable despite the political turmoil caused by the short-lived martial law declaration of President Yoon Suk Yeol, senior executives of three global ratings agencies said.

Moody's Ratings, Fitch Ratings and S&P Global Ratings all shared the view that Korea's credit ratings and its economic fundamentals are unscathed by Yoon’s botched martial law attempt and the ensuing political chaos, including the National Assembly’s bid to impeach the president, according to Seoul’s Ministry of Economy and Finance on Friday.

The ministry said Deputy Prime Minister and Finance Minister Choi Sang-mok held virtual meetings with high-ranking officials of the three rating agencies on Thursday.

During the meetings, Choi said, “The impacts of the past two presidential impeachments on the economy were limited. Our government systems, including crisis management mechanisms, are functioning well. We will make sure foreign investors can execute investment and business activities safely and stably.”

The finance minister pledged to do his best to mitigate the impact of the ongoing political strife on the domestic capital market.

CURRENT SITUATION NOT SERIOUS ENOUGH TO THREATEN RATINGS

In response, Roberto Sifon-Arevalo, managing director and head of analytics and research at S&P Global, said it was notable how the Korean government system continued to function despite the political chaos, according to the ministry.

He added that follow-up measures by Korea's financial authorities reflected the stability of the country's market system.

S&P has maintained its long-term sovereign credit rating of Korea at AA, the third-highest on its sovereign ratings table, unchanged since August 2016.

Marie Diron, global head of Moody's Sovereign and Sub-Sovereign Risk Group, echoed his view, saying that downside risks related to the Korean economy are unlikely to materialize.

Moody's has maintained its sovereign credit rating of Korea at Aa2, its third-highest, since December 2015.

James Longsdon, global head of sovereign and supranational ratings at Fitch Ratings, said the current situation is not serious enough to threaten Korea's rating, according to the ministry.

Fitch has maintained Korea's rating at AA-, its fourth-highest, since September 2012.

YOON FACES SECOND IMPEACHMENT VOTE AT PARLIAMENT

The finance minister’s meetings with rating agencies came about a week after President Yoon Suk Yeol's short-lived declaration of martial law.

The opposition-controlled parliament is set to vote on a second motion to impeach the president this Saturday after the first impeachment motion last week was scrapped due to the lack of a quorum.

Yoon survived an impeachment vote against him after an overwhelming majority of governing party lawmakers boycotted parliament on Dec. 7.

Korea’s finance minister and central bank chief have vowed to take necessary action to stabilize Asia’s fourth-largest economy.

Finance Minister Choi dismissed fears that the country would fall into a recession next year as overdone.

Bank of Korea Governor Rhee Chang-yong also shrugged off concerns about the negative impact of the country's political risk on the economy.

Write to Sang-Yong Park at yourpencil@hankyung.com
In-Soo Nam edited this article.