Iceland's government said it's a long way off defaulting on its debt payments after Moody's Investors Service warned it may lower the island's credit grade to junk, arguing lenders could require state support. Moody's is "taking it too far," Economy MinisterGylfi Magnusson said in an interview yesterday, after the rating service cut the outlook on Iceland's Baa3 foreign currency debt to negative. Moody's said it will lower the rating to junk if a June court ruling banning some foreign loans hurts the recovery or forces the government to raise debt levels by bailing out the banks.... Iceland's foreign debt is graded junk by Fitch Ratings, while Standard & Poor's gives the island its lowest investment grade. A June 16 decision by the Supreme Court, banning loans indexed to foreign-exchange rates, may require the state to bail out the banks a second time since 2008, Moody's said. That would add to the government's debt burden, which will reach 150 percent of gross domestic product this year, the rating company estimates.... Finance Minister Steingrimur Sigfusson on July 7 said the June ruling may cost Iceland's banks as much as $4.3 billion, equivalent to a third of the island's economic output. A July 23 decision by the District Court of Reykjavik to allow banks to raise interest rates on loans affected by the Supreme Court's ruling may limit those losses to $1.1 billion, Financial Supervisory Authority Director Gunnar Andersen said. Some of Iceland's lenders may be unable to meet the regulator's 16 percent capital adequacy requirement because of the foreign loan ruling, Andersen said in a July 14 interview. Magnusson said then his government would suffer a "severe blow" if called on to recapitalize the banks, though he didn't rule out financial support.... "Certainly there's risk involved if the contractual rates are applied, but that's a distant possibility," Magnusson said. "Although it might be prudent of those who evaluate the risk to take that into account, I think that's such a farfetched outcome that I don't think the grade can be predominantly based on that." Icesave At the same time, the government has yet to resolve a dispute with the U.K. and Dutch on how to cover depositor claims worth about $5.1 billion. Failure to settle the claims may prompt the International Monetary Fund and other lenders to withhold future disbursements, Moody's said. Read more...
Moody's is "taking it too far," Economy MinisterGylfi Magnusson said in an interview yesterday, after the rating service cut the outlook on Iceland's Baa3 foreign currency debt to negative. Moody's said it will lower the rating to junk if a June court ruling banning some foreign loans hurts the recovery or forces the government to raise debt levels by bailing out the banks....
Iceland's foreign debt is graded junk by Fitch Ratings, while Standard & Poor's gives the island its lowest investment grade. A June 16 decision by the Supreme Court, banning loans indexed to foreign-exchange rates, may require the state to bail out the banks a second time since 2008, Moody's said. That would add to the government's debt burden, which will reach 150 percent of gross domestic product this year, the rating company estimates....
Finance Minister Steingrimur Sigfusson on July 7 said the June ruling may cost Iceland's banks as much as $4.3 billion, equivalent to a third of the island's economic output. A July 23 decision by the District Court of Reykjavik to allow banks to raise interest rates on loans affected by the Supreme Court's ruling may limit those losses to $1.1 billion, Financial Supervisory Authority Director Gunnar Andersen said.
Some of Iceland's lenders may be unable to meet the regulator's 16 percent capital adequacy requirement because of the foreign loan ruling, Andersen said in a July 14 interview. Magnusson said then his government would suffer a "severe blow" if called on to recapitalize the banks, though he didn't rule out financial support....
"Certainly there's risk involved if the contractual rates are applied, but that's a distant possibility," Magnusson said. "Although it might be prudent of those who evaluate the risk to take that into account, I think that's such a farfetched outcome that I don't think the grade can be predominantly based on that."
Icesave
At the same time, the government has yet to resolve a dispute with the U.K. and Dutch on how to cover depositor claims worth about $5.1 billion. Failure to settle the claims may prompt the International Monetary Fund and other lenders to withhold future disbursements, Moody's said.
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Possibly related and recent speculation: Best Energy in Reykjavik Diversity is the key to economic and political evolution.
Ross Beaty,CEO of Magma Energy, that bought the HS ORka powerplant in ICeland,has offered Bjork,a 25 % share in HS Orka. Mr Beaty says that he offers Bjork the share at the same price as Magma Energy got it from HS ORka. Bjork has seen his offer and answered " dear ross noticed your message for me you offering me shares in hs orka shows that you totally miss my point i feel this company should not be privatized , it should be given back to the people . therefore i am not interested in shares . but if i would get the same deal as you , a 70% bulletloan from icelanders to buy usage of their own resources , i might reconsider , who wouldn´t ? you didn't really put your money where your mouth is , did you ? good bye björk P.s. I also saw in financial times when you asked me , personally , to pop over to your office and you would lower how long magma´s usage of our resources is going to be . This only reveals how willing you are to cut deals outside law and order " Read more...
" dear ross noticed your message for me you offering me shares in hs orka shows that you totally miss my point i feel this company should not be privatized , it should be given back to the people . therefore i am not interested in shares . but if i would get the same deal as you , a 70% bulletloan from icelanders to buy usage of their own resources , i might reconsider , who wouldn´t ? you didn't really put your money where your mouth is , did you ? good bye björk P.s. I also saw in financial times when you asked me , personally , to pop over to your office and you would lower how long magma´s usage of our resources is going to be . This only reveals how willing you are to cut deals outside law and order "
björk
P.s. I also saw in financial times when you asked me , personally , to pop over to your office and you would lower how long magma´s usage of our resources is going to be . This only reveals how willing you are to cut deals outside law and order "
What, in your view, is the Magma deal all about? It is a very important case for Iceland. An international corporation is trying to buy up the exclusive rights to our natural resources. We were warned almost immediately after the banking collapse that this would happen, for instance by Paul Hawken and Joseph Stiglitz. Naomi Klein also discusses this kind of situation thoroughly in `The Shock Doctrine'. It is widely known that nations that find themselves in trouble get besieged by vultures that want to take advantage of their situation and make an easy profit. They start off being all nice and reasonable, gaining the locals' trust - "here to help" - and then... You know all about Magma's history in Peru, right? It is swaddled with human rights violations and disrespect to local customs, unions, law and regulation. The list goes on... Some might say that Magma making rotten deals with Peru is irrelevant, that Iceland is no Peru. "We are not a third world country." But the deals we've made with them are just so bad; a large part of Magma's downpayment comes in the form of a bullet loan from HS Orka itself with 1.5% interest for seven years, with HS Orka shares as collateral. It's a joke. Read more...
It is a very important case for Iceland. An international corporation is trying to buy up the exclusive rights to our natural resources. We were warned almost immediately after the banking collapse that this would happen, for instance by Paul Hawken and Joseph Stiglitz. Naomi Klein also discusses this kind of situation thoroughly in `The Shock Doctrine'. It is widely known that nations that find themselves in trouble get besieged by vultures that want to take advantage of their situation and make an easy profit. They start off being all nice and reasonable, gaining the locals' trust - "here to help" - and then...
You know all about Magma's history in Peru, right? It is swaddled with human rights violations and disrespect to local customs, unions, law and regulation. The list goes on... Some might say that Magma making rotten deals with Peru is irrelevant, that Iceland is no Peru. "We are not a third world country." But the deals we've made with them are just so bad; a large part of Magma's downpayment comes in the form of a bullet loan from HS Orka itself with 1.5% interest for seven years, with HS Orka shares as collateral. It's a joke.
