Global credit rating agency Standard & Poor's has maintained South Korea's sovereign rating at AA as well as its stable outlook despite North Korea-triggered tensions on the Korean Peninsula.

The agency said in its latest release that S&P Global Ratings affirmed its 'AA' long-term and "A-1" short-term sovereign credit rating on South Korea.

It said that its stable outlook on the country also reflects its expectation that geopolitical risks on the peninsula will not escalate over the next two years beyond what it has seen since the leadership change in North Korea in 2011.

S&P said the North "appears to have achieved significant improvements in its weapons technology in the past few months" but nevertheless it views "the likelihood of the North Korean regime provoking a major armed conflict on the peninsula to be low." It said this is because the North has little to gain from an armed conflict, which is only likely to cause political unrest. 

S&P added that chronic North Korea issues are potential downside risks for the South Korean economy but the South's strong fundamentals are believed to offset some of that negative repercussions.