The Debts of the Spenders: Iceland interest rates at 15.5% attract speculative attacks

But while Iceland declared, in effect, an end to the speculative attack, Standard & Poor's, the credit rating agency, cut its sovereign rating for the country.

It reduced its long-term foreign currency rating to A from A+ and put it on negative outlook, citing concerns over banks' reliance on external funding.

"The banks' higher funding costs, combined with the recent 27 per cent depreciation of the Icelandic krona, increase the chances that the economy will contract more and for a longer period than we had foreseen," S&P said in a statement.

http://www.ft.com/cms/s/0/72b29352-0ce1-11dd-86df-0000779fd2ac.html