S&P cuts Iceland outlook to negative from stable

(Reuters) - Standard & Poor's Ratings Services on Friday revised the outlook on the Republic of Iceland's long-term ratings to negative from stable and warned it could cut the rating if government plans to forgive household debt greatly worsens the finances.

The agency also affirmed its BBB-/A-3 long- and short-term foreign and local currency sovereign credit ratings on the country.

"The negative outlook reflects that we could lower the ratings over the next two years if household debt forgiveness substantially worsens Iceland's fiscal ratios or weakens our assessment of the effectiveness and predictability of policymaking," S&P said in a statement.

The agency added that the ratings could stabilize at the current level if the scope of debt relief was limited, the cost to the state was contained, and the mode of financing did not, in its view, deter investment into the Icelandic economy.

(Reporting by Wayne Cole)

Source: http://news.yahoo.com/p-cuts-iceland-outlook-negative-stable-050300356.html

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