(Updates with S&P comments)
By Yoo Choonsik
SEOUL, Jan 30 (Reuters) - Credit ratings agencies played down the impact on South Korea’s ratings of Friday’s threat by North Korea to scrap all key agreements with the South, calling the remarks yet more diplomatic manoeuvring.
“We have tolerance for both positive and negative news flow out of North Korea up to a certain limit,” James McCormack, Head of Asia-Pacific Sovereign Ratings at Fitch Ratings, said by telephone from Hong Kong.
“But I think what we’ve seen today is probably within the tolerance band,” he added.
Kim Eng Tan, a sovereign ratings official at Standard & Poor’s Ratings, also predicted little immediate impact on South Korean ratings from the North Korean remarks.
“Unless things develop to the point where there is a real threat to security or stability on the Korean peninsula, we are unlikely to change our assessment of the South Korean government’s creditworthiness as a result of this declaration,” he said in an email to Reuters.
Fitch has an A-plus sovereign rating on South Korea with a negative outlook while S&P has an A rating with a stable outlook. They have said security concerns regarding North Korea are among the main contraints on South Korean ratings.
North Korea said it was scrapping all accords with the South, blaming South Korea for escalating confrontation on the peninsula. [ID:nSEO230602]
South Korea’s credit ratings were steeply cut to junk status during the Asian financial crisis a decade ago, but have since been raised in line with the improving performance of Asia’s fourth-largest economy. (Editing by Jonathan Hopfner)
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