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Iceland talking to more funds over capital controls deal
March 24, 2017 / 12:05 PM / 9 months ago

Iceland talking to more funds over capital controls deal

LONDON (Reuters) - Iceland’s central bank has said is in talks with more of the foreign funds that saw bonds they own frozen as part of country’s capital controls.

It struck a deal with some funds earlier this month and hopes the remainder, that between them own around $900 million worth of Icelandic bonds or about half the original total, will also accept now they have been given more information.

“Preparations for transactions with other owners of offshore krónur (Icelandic crown-denominated bonds) are underway, and further information will be forthcoming in the next few days,” the central bank said in a statement published late on Thursday.

The funds involved in the new discussions will be given an extended deadline, which could be up to two weeks, to accept the proposals.

The central bank’s deal earlier this month bought those funds’ bonds at an exchange rate of 137.5 crowns per euro - which was a near 20 percent discount on the current euro/crown exchange rate of 119.10 EURISK=.

One heavyweight U.S. holder that has so far not accepted the deal, Boston-based fund Loomis Sayles, has previously said it is looking to get the current exchange rate for its bonds rather than a poorer, discounted rate.

If it stuck to that view and continued to reject the central bank’s offer, it would mean Reykjavik effectively still had some capital controls in place, complicating its situation.

Reporting by Marc Jones; Editing by Jon Boyle

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