FRANKFURT (Standard&Poor's) Nov. 20, 2007--Standard&Poor's Ratings Services said today it revised its outlook on the sovereign credit ratings on the Republic of Iceland to negative from stable. At the same time, the 'A+/A-1' foreign currency and 'AA/A-1+' local currency issuer credit ratings were affirmed. "The outlook revision reflects the continued build-up and persistence of macroeconomic imbalances in the Icelandic economy, compounded by an insufficiently tight fiscal policy," said Standard&Poor's credit analyst Kai Stukenbrock. "Although the central bank's short-term real interest rate has risen to over 8%, the effectiveness of monetary transmission is constrained by the rapid rise in foreign currency borrowing by households and the weak reaction of mortgage rates to monetary tightening." A
