In the latest international expansion by one of the big U.S. rating agencies, Moody's Investors Service has set up a joint venture with Korea Investors Service Inc. to broaden credit rating and analysis in South Korean domestic capital markets.

Terms of the transaction were not disclosed. However, Moody's has acquired a 10% stake in the new company, which will continue to operate under the name Korea Investors Service.

Moody's has been expanding its international rating services for more than 10 years, and in November it opened its first office in Latin America, in Sao Paulo, Brazil. The company's other offices outside the United States are in Tokyo, London, Paris, Sydney, Frankfurt, Madrid, Toronto, Hong Kong, Singapore, and Limassol, Cyprus.

Unlike Thomson BankWatch, which is owned by the same parent company as American Banker, and Fitch IBCA, Moody's has expanded internationally through internal growth and refrained from acquiring stakes in local credit rating companies outside the United States.

Thomson BankWatch, for example, recently acquired 45% in Focus Investment Rating Co., the first rating agency to be set up in Hungary. Fitch announced two weeks ago that it has acquired Mexico's Clasificadora de Riesgos, S.A. de C.V. as part of a plan to expand its coverage of the unsecured debt of Mexican companies and of international securitized transactions.

The Korean joint venture will focus on ratings for the Korean domestic market rather than on cross-border ratings for international investors and financial institutions. Moody's added in a release that the primary activities of the joint venture will be an exchange of credit rating reports, research publications, external seminars, and credit training of Korea Investors Service analysts.

Moody's officials declined to say whether the move in South Korea constitutes a change in policy, but they indicated the U.S. company is exploring its options.

They also suggested it is unlikely there will be any improvement in the credit ratings of Asian countries badly hit over the last year by economic and financial turmoil.

"Our view of Asia is somewhat pessimistic," said Christopher T. Mahoney, managing director of banking and sovereign group ratings at Moody's. "The first wave of the crisis may be over, but the second wave is not."

Mr. Mahoney also said there are still "enormous" amounts of debts in Asia that will mature in the near future. He suggested this could put further pressure on hard currency reserves in Asian countries.

Compounding the problem, he added, is the ongoing recession in Japan.

"There's nothing to compensate for the drop in demand from Japan, and there's no engine left to lead Asia out of the crisis," Mr. Mahoney said.

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