S and P upgrades Korea’s sovereign rating to record high of AA

Global credit appraiser Standard and Poor’s raised South Korea’s sovereign rating one notch to a record high of AA from AA- on Monday, with a stable outlook on the country’s steady growth and flexible fiscal and monetary policies, according to Korea Herald.

“The upgrade reflects our assessment that Korea’s strong record of steady growth has generated a prosperous economy, greater fiscal and monetary flexibility, and continual improvements in external metrics,” the company said in a statement.

“Our ratings on Korea reflects the country’s favorable policy environment, sound fiscal position and net external creditor position. Significant security risks and contingent fiscal liabilities partly offset these strengths.”

AA is the third highest grade in the S and P evaluation scheme and is possessed by France, Belgium and Britain, placing South Korea one level higher than China and two higher than Japan.

It is the second time in a year that S and P has upgraded the country’s sovereign rating, and comes less than a year since the last upgrade to AA- in September last year.

S and P said Asia’s fourth-largest economy has outperformed other high-income economies in recent years, with its real per capita gross domestic product growing 2.6 percent, higher than the average 0.3-1.5 percent growth range of advanced countries.