S&P upgrades Iceland to BBB+

Standard & Poor's said it raised its long-term sovereign credit ratings on Iceland to BBB+ from BBB and affirmed the short-term ratings at A-2.

The agency also raised the Transfer & Convertibility Assessment to BBB+ from BBB.

The outlook on the long-term ratings is stable.

S&P said the upgrade primarily reflects the further progress Iceland has achieved in resolving the issues standing in the way of capital account liberalization since June 2015. In particular, the comprehensive proposals unveiled in mid-2015 have received support from the creditors of the three banks that defaulted in the 2008 crisis (the old bank estates), thereby reducing the uncertainties surrounding the capital account liberalization plan.

It also reflects the agency’s expectation that general government debt will continue to decline over the next four years, lowering government expenditure on interest payments.

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