The Republic of Iceland's economy is recovering from the systemic failure of its three largest banks, and has returned to positive economic growth after two years of severe contraction. In our view, significant headway has been made in restructuring the private-sector balance sheet and we expect the process to be mostly completed by mid-2012. We are therefore revising the outlook on the ratings on Iceland to stable from negative, which balances our view of Iceland's improved economic fundamentals with downside risks associated with capital controls being lifted in the next few years. We are also affirming the 'BBB-/A-3' sovereign ratings on Iceland. On Nov. 23, 2011, Standard&Poor's Ratings Services revised to stable from negative its outlook on the
