Iceland’s parliament may reject a foreign depositor bill for a second time in a move that would sour relations with the U.K. and Netherlands and that Fitch Ratings has signaled will weaken the sovereign’s credit grade.

All 28 opposition lawmakers in the 63-seat parliament will try to block a bill that obliges Iceland to cover the depositor claims using borrowed funds from the U.K. and Netherlands, party leaders told Bloomberg.

Even if the depositor bill does pass through parliament, it must still be ratified by President Olafur Ragnar Grimsson. More than 34,000 people have signed a petition calling on him not to sign the law. If he bows to public pressure, as he did in 2004 on a media ownership bill in response to a petition carrying 32,000 signatures, the bill will be put to a referendum.  20-Dec-09

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