“As fresh money pours back into crisis-hit countries including Ireland, Portugal and even Greece, Iceland remains frozen out of international capital markets as its government remains locked in a battle with creditors over pre-crisis borrowings,” Chris Spink of Reuters writes in an article ‘Iceland cold-shouldered as crisis countries rebound’ published on Friday.
Photo: Páll Kjartansson/Iceland Review.
“The election of Progressive Party leader Sigmundur Gunnlaugsson as prime minister on a populist strategy to cut people’s mortgages partly by retrospectively imposing a tax on the assets of its failed banks has once again stoked up the heat in the fight,” Spink writes.
Since Sigmundur took office, yields on Iceland’s five-year bonds have gapped out from 4.1 percent to 6.4 percent earlier this month, Reuters reports. According to Barry Russell, partner at law firm Bingham McCutchen, which is advising a group of bondholders and other creditors who make up claims, there is no jurisdiction where the value of insolvency claims can be drastically cut by the government. “There is no justification. Many of the creditors whose claims are at par have already lost 70% of their money,” he said.
Russell is advising a group of bondholders and other creditors who make up the majority of claims. Matt Hinds, partner at Talbot Hughes McKillop, financial adviser to this group, told Reuters that attracting foreign investment “will be the only way for Iceland’s economy to recover.”
Read the full article here.