Moody's Warns of Korea's Record Sovereign Debt

  • By Kim Jung-hoon

    May 13, 2021 10:04

    Global ratings firm Moody's has warned that Korea's sovereign debt level stands at a historically high level.

    Moody's kept Korea's sovereign credit rating at Aa2 on Wednesday with a "stable outlook" but warned the debt level could test the country's "long-established track record of fiscal discipline."

    It also warned that an economic downturn or a sharp increase in interest rates could cause problems with household loans from commercial banks. But it added that it "expects Korea's debt affordability to remain strong."

    Korea's sovereign debt rose to 44 percent of GDP last year and is forecast to rise to 60 percent.

    The Aa2 rating is the third-highest level on Moody's 21-level scale. Korea has retained it since December 2015. Hong Kong and Taiwan's sovereign ratings stand at Aa3, which is a notch below Korea's, while Japan and China's ratings are A1, or two notches lower.

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