Moodys annual report on Iceland was very positive news for the country. The report was released earlier today. Moody’s said that Icelandic banks have mad “highquality” investments abroad and concern about their mounting debts and financial stability was unfounded.
“Market concerns about a banking crisis were exaggerated,” Joan Feldbaum-Vidra, an analyst at Moody's said. “The external debt buildup has been financed by high-quality external foreign investments and the banks' foreign assets and liabilities are very closely matched.”
“In the remote event a banking crisis were to occur, it could be managed by the government which has a very low level of debt, around 22% of GDP, less than half the level of other Aaa-rated advanced economies on average,” said Feldbaum-Vidra. She added that Iceland's per capita GDP of $50,000 is high even relative to other Aaa-rated countries.
July was very positive towards emerging markets and high-risk environments in general. EURISK has moved from 97.25 in the beginning of July to 90.25 just after Moody’s annual report was released.We continue to see some light at the end of the tunnel. What we need now is a turnaround in inflation. If we in earnest see a turnaround in inflation investment in ISK-bonds could be a very good idea. Investors get a yield of more than 11 %, which give investors some room against a weaker ISK. If you want to invest in ISK-bonds you should choose between the bond maturing in 2008 and the bond in 2010. The ICETN 9.5 % 2008 is a new bond and was issued in the beginning of June 2006. It looks attractive compared to other government bonds.