The rating agency Fitch has confirmed the long-term credit rating for the Icelandic state as BB+, which means that it will remain in a so-called junk category. However, the long-term outlook has been upgraded from negative to stable.
From the 2008-2009 protests. Copyright: Icelandic Photo Agency.
“This is a certain defensive victory and positive as far as it goes, although it would have been better to get a higher credit rating,” Finance Minister Steingrímur J. Sigfússon told Fréttabladid. “It supports the estimate that Iceland is recovering.”
This is Fitch’s first evaluation for Iceland after the Icesave legislation was rejected in a referendum last month, visir.is reports.
Senior director of Fitch Ratings Paul Rawkins told Bloomberg that Iceland’s credit rating might remain in the junk category for as long as two years or until capital controls are lifted, which is not scheduled until 2015.
According to Morgunbladid, this is the first time since 2006 that Fitch Ratings has upgraded its evaluation of Iceland in some way.
Fitch’s review includes that the outcome of the referendum will not impact the economic recovery program of Iceland and the International Monetary Fund (IMF), and that the Icelandic government is confident that the bankruptcy estate of Landsbanki can cover at least 90 percent of the Icesave debt.
Representatives of the government and the Central Bank of Iceland met with the rating agencies at the IMF convention last month. Sigfússon told Fréttabladid that the work is now delivering results.
This is the second credit rating for Iceland since the Icesave legislation was rejected in the referendum. Moody’s issued its rating late last month but Standard & Poor’s has yet to evaluate the situation. Sigfússon said he doesn’t know when it is to be expected.