Standerd & Poor's cut Iceland's local currency credit ratings citing restrictions by imposed capital controls. They lowered their long and short term local currency credit ratings to BBB/A-3 from BBB+/A-2 according to the statement.

In the statement S&P said The potentially prolonged application of foreign exchange controls will restrict Iceland's monetary and fiscal flexibility and investment prospects. While they held the outlook assessment at negative and subject to further downgrade shall the Icesave negotiations break down.

the controls were imposed by the central bank at the end of 2008 following the collapse of the nation's three biggest banks triggering an 80% slump in the Krona versus the euro in offshore markets. Though the negotiations are undergoing with UK and Netherlands to compensate foreign depositors in Icesave Internet accounts, the funding is still at risk according to S&P as the IMF said its program its not liked to the progress, yet the main contributors in the bailout are Nordic nations and they signaled suspension of loans until the negotiations are through.