Fitch raises Iceland credit rating out of junk

The international financial ratings agency, Fitch yesterday increased its long-term foreign currency debt rating for Iceland by one notch from BB+ to BBB-. The country’s short-term debt rating was also put up from B to F3.

The decision is more significant than it might first seem, because it brings Iceland out of the so-called junk investment grade and back into the group of investment grade nations. The country was put down to junk following its 2008 banking crash.

Fitch Ratings said in a statement that Icelanders have completed their International Monetary Fund recovery plan with good results and that the country has secured itself renewed access to world credit markets. An economic recovery in the country is underway and the financial sector restructuring programme is going well.

The company also notes that the Icesave dispute is less of a threat to the nation than ever and that Landsbanki has already begun paying back the money; but that it could still pose a hazard further down the line.

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