Fitch Rates Korea's US Dollar and Euro Bonds 'AA-(EXP)'

Tue Jun 3, 2014 4:29am EDT

(The following statement was released by the rating agency) HONG KONG, June 03 (Fitch) Fitch Ratings has assigned the Republic of Korea's forthcoming US dollar-denominated global bonds due 2044 and euro-denominated global bonds due 2024 expected ratings of 'AA-(EXP)'. The final ratings are contingent on the receipt of final documentation conforming to information already received. The expected ratings are in line with Korea's Long-Term Foreign Currency Issuer Default Rating of 'AA-'. The sovereign's Long-Term Local Currency Issuer Default Rating is 'AA'. The rating Outlooks are Stable. KEY RATING DRIVERS Korea's ratings are underpinned by its fundamental strengths, which include a resilient economy and a robust macroeconomic policy framework in which sustained fiscal discipline and a flexible exchange rate remain intact. These factors leave Korea well positioned to cope with the risks of high household debt, and a volatile global financial environment. RATING SENSITIVITIES The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently well balanced. The main factors that, individually or collectively, could trigger positive rating action are: - A material reduction in the general government debt/GDP ratio - A further sustained reduction in the vulnerability of the banking sector, for example by continuing to reduce the reliance on short-term external financing - A decline in the sovereign's contingent liabilities (e.g., lower state-owned enterprise debt) The main factors that, individually or collectively, could trigger negative rating action are: - A sharp deterioration in the banking sector's funding position or asset quality, leading to a need for sovereign support - A household debt crisis, which impacts the economy through either a sharp decline in private consumption or a sharp rise in non-performing loans in the banking system and, consequently, leading to a deterioration in the sovereign's fiscal position - A decline in the economy's potential growth rate of 3.5%-4%, leading to significantly higher unemployment or broader economic and financial instability Contact: Primary Analyst Thomas Rookmaaker Director +852 2263 9891 Fitch Ratings (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Secondary Analyst Andrew Colquhoun Senior Director +852 2263 9938 Committee Chairperson Tony Stringer Managing Director +44 20 3530 1219 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, 'Sovereign Rating Criteria' dated 13 August 2012 and 'Country Ceilings' dated 09 August 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Sovereign Rating Criteria here Country Ceilings here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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