Bangkok--1 Jun--Moody's
Moody's Investors Service says North Korea's latest long-range missile test and its second nuclear detonation underscore the geopolitical event risk that South Korea faces from its communist neighbor, and more widely for the rest of Asia and globally.
"From a ratings perspective, while recognizing that the North's recent flurry of provocations has heightened uncertainties, we also consider that the stable outlook on South Korea's A2 sovereign ratings remains appropriate," says Thomas Byrne, a Moody's Senior Vice President.
'Geopolitical event risk has been primarily contained by South Korea's long-standing and trial-tested alliance with the US, while the Six Party Framework has also contributed, although the North's second nuclear test on May 25 has revealed the futility of this diplomatic initiative," says Byrne.
Byrne was speaking on the release of a special comment -- which he authored -- on the implications of North Korea's recent actions.
In the comment, he notes that additional factors which can help contain the event risk stemming from the North include the gradual emergence of a more unified and consistent approach towards Pyongyang, and a low probability of unilateral US military action.
"In terms of the global implications, the reality and threat of North Korean nuclear proliferation mean that the risks are not limited to the Korean peninsula," says Byrne. "In the immediate vicinity, Japan feels threatened, while further afield, Pyongyang's activities in the Middle East could heighten geopolitical tensions in that region."
The new Moody's report is entitled, North Korea's Provocations Underscore Event Risk to South Korea and Beyond. It can be found at www.moodys.com.