Moody's: Credit profiles of Korean corporates to remain broadly stable, despite rising geopolitical tension

The US ratings agency, Moody's Investors Service, out with the latest report on the credit review of the Korean companies, in the wake of the ongoing geopolitical tensions surrounding the North Korean nuke threat.

Key Points:

Steady earnings, manageable capital spending and a broadly stable operating environment will keep the credit profiles of Korean non-financial corporates stable over the next 12 months.

Moody's believes that the potential for outright military conflict with North Korea remains low, despite an increase from very low levels over the last few months following North Korea's launch of several ballistic missiles.

Of the 23 private sector Korean companies that Moody's rates, 18 have stable outlooks.

But, a significant strengthening of the KRW, weaker-than-expected industry fundamentals and potential military conflict with North Korea pose downside risks to credit quality.

Wan Hee Yoo, a Moody's Vice President and Senior Credit Officer, “The political tensions between Korea and China will have some negative impact on the auto sector and Lotte Shopping, although we expect the impact to be manageable. And, we expect generally favorable operating conditions for rated companies in the technologies, steel, refining and chemical sectors."