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Technology Stocks : Amkor Technology Inc (AMKR) -- Ignore unavailable to you. Want to Upgrade?

To: Norrin Radd who wrote (62)	1/21/1999 2:02:00 AM
From: tech101	Read Replies (1) \| Respond to of 1056

Fitch Acts First in Giving Korea a Ratings Boost By JANE L. LEE Staff Reporter of THE WALL STREET JOURNAL SEOUL, South Korea -- Fitch IBCA raised South Korea's sovereign-debt rating back to investment grade, the first major credit-rating agency to do so since the financial crisis pushed Korean debt into the junk-bond category in December 1997. The move marked a milestone for South Korea, which nearly went bankrupt a year ago and has been bailed out by the International Monetary Fund. But it wasn't entirely unexpected. The government has aggressively built up its foreign reserves to a record $52.51 billion in the past year, and the local currency, the won, has strengthened dramatically. The prospect of another financial crisis on the scale "that enveloped Korea in late 1997 is remote," said Fitch in a statement. Fitch boosted by one notch the rating on Korea's long-term debt denominated in foreign currency, to triple-B-minus -- the lowest investment-grade rating -- from double-B-plus. It also raised its rating on South Korea's short-term foreign-currency-denominated debt to investment grade, lifting it to F3 from B. Fitch maintained its rating on Korea's local-currency-denominated debt at A-minus. Fitch estimated that Korea, as of the end of last year, had about $37.1 billion in short- and long-term sovereign debt and government-guaranteed debt outstanding. Gradual Upgrades Fitch, along with Moody's Investors Service Inc. and Standard & Poor's Ratings Group, lowered South Korea's foreign-currency-denominated debt to below investment-grade status, which is known as junk level, as the crisis engulfed the country. All three rating agencies have gradually raised South Korea's sovereign rating, but Moody's and S&P still keep South Korea a notch below investment-grade quality. Thomson BankWatch, meantime, continues to maintain its investment-grade rating on South Korea. Growing expectations that the country's sovereign rating would soon be raised has boosted prices on Korea's stock market, sending the composite index up nearly 10% since the close of 1998. It is believed that S&P and Moody's will follow Fitch's move. Fitch's ratings announcement came after the close of Korea's stock market Tuesday, where the composite index slipped to 618.12, a loss of 4.40 points. Fitch's ratings upgrade could make it easier for South Korea to raise money on the global market and may boost foreign-direct investment into the country, analysts said. Koh Wonjong, head of research for Japan's Nomura Securities' Seoul branch, said the upgrade would now open the way for Japanese investors into South Korea. "Most Japanese institutional investors have not been able to invest in Korea, as it was below investment grade. Conservative funds now have the option of investing in Korea," Mr. Koh said. But he added that with the stock market's recent rally (the composite index has more than doubled in the past four months) it would be difficult to expect a rush of investors. Challenges on the Horizon Analysts also warned that the higher ratings doesn't mean South Korea is out of the woods. "You have to keep in mind that Fitch has made South Korea investment-grade, but it is still below the pre-crisis sovereign rating," said Tae Chung, head of research for SG Securities in Seoul. Before the crisis, Fitch rated South Korea at double-A-minus. Fitch agrees that South Korea has hurdles ahead. "The impressive rebound in [foreign reserves] should not be allowed to obscure the challenge of structural reform," it said, referring to Korea's debt-ridden corporate sector, whose reckless expansion brought on the crisis, and a financial sector with troublesome lending practices. "These factors continue to weigh heavily on the level of economic activity and could take two to three years to work themselves out," Fitch said. South Korea continues to face challenges in carrying out reform, especially in the corporate sector. Mammoth-size family-run business groups are reluctant to give up their fiefdoms, and militant labor unions strive to guard job security. For example, Daewoo Electronics Co.'s labor union Tuesday held a one-day strike for the second time to protest a business swap encouraged by the government as part of corporate restructuring. Under terms of the swap, Daewoo Electronics would be handed over to Samsung Group, and in exchange Daewoo Group would take over Samsung's unprofitable automotive business. Tuesday's strike caused activity at six Daewoo factories to be temporarily halted, a Daewoo spokesman said. wsj.com