Republic of Iceland Ratings Raised To 'A/A-1' On L

·         We believe that the recent lifting of most of the remaining capital • controls and

the conclusion of an agreement with the owners of offshore krona assets strengthen

Iceland's external profile.

·         We are therefore raising our long- and short-term ratings on Iceland to 'A/A-1'

from 'A-/A-2'.

·         The stable outlook reflects our view that the potential for improvements in

Iceland's public finances is balanced by the risk of the domestic economy

overheating over the next two years.

Attached find report