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Moody's Investors Service on Monday said it has re-aligned South Korea's local currency bond ceiling to Aa1 from Aaa, in oder to better reflect the country risk concept.
However, the rating agency kept the country's A2 foreign and local currency government ratings, Aa3 foreign currency bond ceiling, A2 foreign currency bank deposit ceiling, and Aa1 local currency bank deposit ceiling unchanged, with stable outlook.
"The local currency country ceiling for bonds summarizes general country-level risks, excluding foreign-currency transfer risk, that should be taken into account in assigning local currency ratings," Thomas Byrne, a Moody's Senior Vice President said. The agency also pointed out that local currency ceilings do not often change.
Moody's is also planning to alter the local currency bond ceilings globally in a way that may place more weight on certain country risk factors, apart from what has already been accounted under its current sovereign rating methodology.
The rating agency said it would refine the global approach by October, but in the case of South Korea, it decided that the risks presented by the potential for armed conflict or geopolitical disturbances with North Korea should be incorporated into the local currency bond ceiling, as it is incorporated for other countries, such as for Israel and various highly rated Middle Eastern countries.
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