Get Out of Dodge!

From Bloomberg.com: Worldwide

The cost to protect the bonds of Iceland’s three biggest lenders from default rose after central bank Governor David Oddsson said “unscrupulous dealers” are trying to break the country’s financial system.

Credit-default swaps on Kaupthing Bank hf, the nation’s largest lender, increased to a record 1.65 million euros ($2.6 million) in advance and 500,000 euros a year, up from 1.58 million euros upfront, CMA Datavision prices show. The cost implies a 59 percent risk of default within five years, according to a JPMorgan Chase & Co. valuation model.

Oddsson called for an international investigation into attempts to drive Iceland’s economy “to its knees,” in a speech on March 28. The central bank was forced to raise its benchmark rate to a record 15 percent last week to defend the krona after a 30 percent slump against the euro this year.

“The longer this goes on, the worse it gets,” said Olivia Frieser, a London-based bank analyst at BNP Paribas SA, France’s biggest lender. “It is a question of confidence.”

Technorati Tags: Iceland, Kaupthing Bank hf, Glitnir Banki hf, Landsbanki Islands hf,

This entry was posted on Monday, March 31st, 2008 at 8:27 am and is filed under Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.