Moody's, a ratings agency, on Tuesday downgraded its outlook on Iceland's sovereign credit rating, citing worries over the country's economic recovery if the Icesave dispute endures.

The agency changed its outlook on Iceland's Baa3 rating, the lowest possible investment grade level, to negative from stable. It also brought its outlook on the country's foreign currency bond ceiling and foreign currency deposit ceiling down from stable to negative.

A spokesperson for the Central Bank of Iceland