Moody's and Korea Investors Service hold 10th annual conference
Global rating agency Moody's and its Korean affiliate, Korea Investors Service (KIS), held their tenth annual conference in Seoul today.
The focus of this year's conference was the global outlook and current credit issues facing Korea's issuers.
"The global economy is gradually recovering, but risks are to the downside. Asia Pacific economic and fiscal fundamentals will remain relatively strong, and ratings momentum has been generally on the upside," says Tom Byrne, a Moody's Senior Vice President and Regional Credit Officer, who kicked off the conference with the global, Asia Pacific and Korean sovereign outlooks.
"Korea demonstrates strong fiscal fundamentals which will enable a relatively large degree of policy space to cope with the contingent domestic risks and external shocks," says Byrne.
"Its ratings outlook hinges on containing the banks' funding vulnerability and contingent fiscal liabilities, while maintain- ing relatively strong economic growth" he adds.
Graeme Knowd, a Moody's Associate Managing Director, spoke next on the global banking outlook.
"Government support has long obscured the banking sector's fundamental riskiness, and the many spectacular failures of recent years make it impossible to ignore these risks any longer," says Knowd.
"Support is now less certain, as the willingness of governments has been reduced by political backlash and their abilities constrained by fiscal pressures," he adds.
On the Korean banking sector, Youngil Choi, a Moody's Vice President and Senior Credit Officer, says, "The outlook for Korea's banking system remains stable with increasing tail risks that could arise as a result of contagion from the euro area and knock-on effects from China. "We expect the overall operating environment to weaken over the next 4-6 quarters, similar to the situation for many banking systems in Asia Pacific.