Iceland Bats Down Speculation About Debt Writedown

Nov 19 2013 | 10:22am ET

Creditors are either way off—or underestimating their peril—when spit-balling about how large a haircut they'll have to take on Icelandic bank debt.

Finance Minister Bjarni Benediktsson told Bloomberg News that rumors of a 75% write-down are "exaggerated." But he added that the actual write-down could be lower—or higher.

"The 86% was mentioned at a lunch meeting, very unofficially," Benediktsson said.

"We want to work toward a solution on a professional basis," he added. "I aim at creating a solution in the coming weeks and months that we can work with."

Iceland has said it will not lift capital controls until it reaches a deal with the creditors, which include many hedge funds that bought the claims against three collapsed Icelandic banks for pennies on the dollar. Among the hedge funds involved at Davidson Kempner Capital Management, Hayman Capital Management and Taconic Capital Advisors.

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