Moody’s upgrades Korea rating to A1

Moody’s upgrades Korea rating to A1

Moody’s Investors Service has changed Korea’s government bond ratings to A1 from A2 in three years, citing the Korean economy’s “exceptional” resilience to the global crisis.

The ratings agency maintained the outlook for Korea at “stable.”

“The change has been prompted by Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” Moody’s senior vice president Tom Byrne said in an e-mailed statement.

The ratings agency said the Asia’s fourth-largest economy was responding quickly to the improving global economic environment.

The government’s supportive policy measures also helped sustain economic growth, Moody’s said.

“The resiliency of Korea’s economy was evident in its ability to withstand relatively well the concretionary forces which emanated from the global recession,” Byrne said.

Before the announcement from Moody’s today, some observers had expected that Moody’s would maintain Korea’s credit rating at A2 due to lingering concerns over the large proportion of short-term external debts in the banking sector.

However, Moody’s said the vulnerabilities coming from the banking industry’s reliance on external debts are “being addressed and reduced.”

Despite the upgrade, Byrne said that the eventual exit from the accommodative monetary policy by the Bank of Korea could slow growth momentum in the next one or two years.

The ratings agency also warned that Korea will face demographic challenges in the next 10-15 years.

It pointed out two major risks that could affect future ratings – one, the snowballing public-sector debt and the other, the risk posed by North Korea.

However, concerns over possibilities of military provocations can be counterbalanced by “South Korea’s robust alliance with the United States and shared interests among regional powers for stability on the peninsula,” it said.

The Korean economy averted a recession and pulled off the 0.2 percent growth in 2009, while most of the global regions were suffering from a recession.

The central bank recently revised the 2010 growth forecast for Korea to 5.2 percent from a previous 4.6 percent, citing robust exports and improving domestic demand.

Korean stocks sharply rose after Moody’s upgraded the country’s bond ratings to A1 and maintained a stable outlook.

Bodies of missing sailors seen in sunken warship(천안함)

Bodies of missing sailors seen in sunken warship(천안함)

Salvage workers saw several bodies inside a sunken naval ship on Thursday when they entered the stern of the 1,200-ton Cheonan corvette to install water pumps after a crane raised it from the sea.

It is believed that many of the vessel's 44 missing crew members have been trapped inside since it sank last month near the North Korean border.

South Korea began lifting the vessel on Thursday in waters near the tense border with North Korea, about three weeks after the ship went down following a mysterious explosion on board, according to AP.

Efforts to locate the 44 missing crew and salvage the wreckage of the 1,200-ton Cheonan has been impeded by high winds, a swift current and other bad weather conditions, the report said.

The Joint Chiefs of Staff said a huge naval recovery-crane started hoisting the stern, where most of the missing sailors are believed trapped. Footage by SBS television showed the stern's upper part appearing on the sea surface, workers taking on the deck and using hoses to pull water out of it and lighten the weight.

The report said fully retrieving the stern, moving it onto a barge and searching for the missing crew are expected to take 11 hours. The stern is to be moved to a naval base to investigate the cause of the explosion while the rest of the ship is to be salvaged as early as next week, AP quoted JCS officials as saying.

Fifty-eight crew members were rescued shortly after the Cheonan split into two after exploding March 26 during a routine patrol. Divers have recovered two bodies.

No cause has been determined. There has been some suspicion but no confirmation of North Korean involvement in the sinking, which occurred near the two Koreas' disputed western sea border -- a scene of three bloody inter-Korean naval battles, the report said.