Choi Sang-mok, Relay Meetings with 3 Major Credit Rating Agencies... "Korea, Solid and Stable"

Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Economy and Finance, is holding a video conference with Roberto Saipon-Arevalo, Global Head of Sovereign Ratings at S&P, one of the world's top three credit rating agencies, at the Government Seoul Office in Jongno-gu, Seoul on the 12th.

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Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, is continuing a series of meetings with the three major global credit rating agencies, focusing on calming market instability caused by the martial law and impeachment political crisis. The three major rating agencies expressed the view that South Korea's sovereign credit rating remains stable despite the martial law situation.

The Ministry of Economy and Finance announced that on the afternoon of the 12th, Deputy Prime Minister Choi held a virtual meeting with senior officials from global rating agencies Moody's, Fitch, and S&P to explain the political situation in South Korea and the government's response direction.

During the meeting, Deputy Prime Minister Choi stated, "All of South Korea's national systems, including the constitution, market economy, and crisis management, are operating normally as before," and explained, "There were two previous instances of turmoil due to impeachment, but their impact on the overall economy was limited." He added, "The government plans to actively participate in the ruling-opposition economic council recently proposed by the opposition party," emphasizing, "Smooth communication and cooperation with the National Assembly on economic issues will continue to be possible."

Attending the meeting were Roberto Saipon-Ar?valo, Global Head of Sovereign Ratings at S&P; Marie Diron, Global Head of Sovereign Ratings at Moody's; and James Longsdon, Global Head of Sovereign Ratings at Fitch. They stated that South Korea's sovereign credit rating remains stable and evaluated that the recent situation actually demonstrated South Korea's institutional strength and resilience.

S&P noted, "Despite the recent situation, the fact that South Korea's national systems functioned well is the most important aspect for rating agencies," adding, "The swift market stabilization measures taken immediately after the incident by financial authorities such as the Ministry of Economy and Finance and the Bank of Korea demonstrate the robustness of South Korea's economic system."

Moody's said, "We are closely monitoring South Korea's political situation," and added, "The government's active efforts to communicate in this situation will be very useful for credit rating assessments."

They also agreed that "considering the recent situation, there is no likelihood of downside risks materializing for the South Korean economy," reaffirming that "South Korea's strong rule of law supports its high sovereign credit rating."

Fitch stated, "Considering that South Korea's sovereign credit rating was not affected during past presidential impeachments, this situation similarly does not pose a threat to the country's credit rating," and added, "We highly appreciate the South Korean government's efforts to transparently explain the current situation."

The three major rating agencies have raised South Korea's sovereign credit rating to historically high levels since the 2010s and have maintained these ratings to date. Moody's and S&P assign ratings of 'Aa2' and 'AA' respectively, while Fitch assigns 'AA-', with all rating outlooks being 'stable.'

In the market, concerns are growing that prolonged political uncertainty triggered by President Yoon Suk-yeol's declaration of martial law could lead to a downgrade of the sovereign credit rating. A downgrade would increase funding costs for the government and domestic companies, negatively impact exchange rates and stock markets, and risk destabilizing the domestic foreign exchange and financial markets.

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