Lánamál ríkisins - Other information disclosed according to the rules of the Exchange

S&P raises Iceland‘s long-term ratings to A- on stronger external position

The rating agency S&P Global Ratings raised its long-term foreign and local
currency sovereign credit ratings on Iceland to A- from BBB+. At the same time,
the A-2 short-term ratings were confirmed. The outlook is stable. 

This upgrade stems from Iceland‘s stronger-than-anticipated external
performance characterized by a sizeable current account surplus and material
growth in the CBI‘s foreign exchange reserves throughout 2016 as well as the
Icelandic economy‘s robust growth dynamics and S&P‘s expectation of a continued
reduction in the general government debt level as a percentage of GDP. 

The stable outlook primarily balances the potential for improvement in
Iceland‘s external and monetary profiles, as capital controls are fully lifted,
against the risk of the domestic economy overheating over the next two years.
S&P could raise the ratings if capital controls are fully lifted without
putting the balance of payments or financial stability at risk. S&P could also
raise the ratings if the ratio of net general government debt to GDP declines
materially faster than they presently anticipate. S&P could lower the ratings
if they perceived that recent sizable wage hikes led to a significant
overheating of the domestic economy, with heightened risks for the country's
monetary, fiscal, or external stability. This could also be the case if further
liberalization of capital controls proceeded in a disorderly fashion, placing
renewed pressure on the Icelandic krona exchange rate and the financial system. 





Attached find report

Attachments:

SP Global Iceland Publication 13 January 2017.pdf