OREANDA-NEWS. S&P Global Ratings today said it has raised its the long-term foreign and local currency credit ratings on Small Business Corp. (SBC) to 'AA' from 'AA-'. At the same time, we affirmed the short-term ratings at 'A-1+'. The outlook on the long-term ratings is stable.

The upgrade of SBC follows our raising of the long-term credit ratings on the Republic of Korea (AA/Stable/A-1+). We equalize the ratings on SBC with the ratings on the Korean sovereign reflecting S&P Global Ratings' opinion that there is an almost certain likelihood of timely extraordinary support from the Korean government to SBC in the unlikely event of financial distress.

We base our assessment of an almost certain likelihood of extraordinary government support on our assessment of the following SBC characteristics:

Critical role as a government-controlled entity in Korea that is responsible for nurturing small and midsized enterprises (SMEs) by managing and operating the SME Fund. SBC's financing of SMEs has significant political and economic importance. SBC operates on behalf of the government, providing funding for SME startups in Korea. The private sector cannot readily undertake this role due to the unprofitable nature of the operations. Integral link with the government, reflecting the government's capital contributions to the SME Fund and its strict control over SBC's financial accounts and strategy. The Small and Medium Business Administration (SMBA), a central government agency, supervises SBC. Key management personnel and the board of directors of SBC are appointed either by Korea's president or the SMBA. An operating committee consisting of members from government departments and the private sector authorizes SBC's budget. We no longer assign a stand-alone credit profile to SBC as the likelihood of government support is almost certain. In addition, we do not believe government support is subject to transition risk. SBC executes strategic government policies and it is increasingly difficult to differentiate SBC from the Korean government.

The stable outlook on SBC reflects the outlook on the Korea sovereign ratings over the next two years. It reflects our assessment of an almost certain likelihood of timely extraordinary government support for SBC. Our ratings on SBC would move in tandem with our ratings on the Korean sovereign.

We believe the almost certain likelihood of government support for SBC will remain over the medium term. The ratings on SBC could face downward pressure if SBC's public policy role or its link with the government weakens. In addition, we could lower the ratings on SBC if we were to lower the ratings on the Korean sovereign.