S&P raises Iceland’s credit rating

The rating agency Standard & Poor’s on Friday 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 considered stable.

“The upgrade largely stems from Iceland’s stronger-than-anticipated external performance characterized by a sizable current account surplus and material growth in the CBI’s foreign exchange reserves throughout 2016. We believe current account surpluses will persist over our 2017-2020 forecast horizon,” reads S&P’s report.

The upgrade also reflects the Icelandic economy’s robust growth dynamics according to S&P and the agency’s expectation of a further reduction in the general government debt level as a percentage of GDP. Iceland has not enjoyed an A class grade since before the country was struck by the international economic crisis in October 2008.

The same day the rating agency Fitch affirmed Iceland’s long-term foreign and local currency issuer default ratings (IDR) at BBB+ and revised its outlook on Iceland’s IDR to positive from stable. The issue ratings on Iceland’s senior unsecured foreign and local currency bonds have also been affirmed at BBB+.