Moody's Investors Service raised South Korea's credit rating Wednesday, rewarding the country for emerging from the global economic crisis with its finances intact.
Moody's lifted government bond ratings to A1 with a stable outlook from A2 — the first increase since July 2007. A1 is the fifth-highest level and six rungs above "junk" status.
"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," said Tom Byrne, a Moody's senior vice president, in a written announcement.
South Korea, Asia's fourth-largest economy, recorded four straight quarters of growth in 2009 after contracting sharply in late 2008 when demand for its exports wilted amid the global financial and economic downturn.
Moody's said South Korea managed to weather the crisis without a large increase in government debt and keeping fiscal deficit relatively small.
"Such achievements place Korea in a favorable position when compared with most other A-rated countries," Byrne said.
Moody's also praised the country for addressing weaknesses in its banking system that were exposed by the crisis, such as a partial reliance on off-shore funding.
It expressed concern about potential risks posed by rival North Korea, which it said "could undermine the South's strong core credit fundamentals."
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