Iceland does not want foreign investors

A law passed on May 22 by Iceland's parliament is offering the foreign holders of about $2.3 billion worth of krona-denominated bonds a choice of either selling out in June at a below-market exchange rate, or have the money they receive upon maturity be impounded indefinitely in low interest bank accounts. In other words, Iceland is trying to kick out foreign investors.

For now, investors aren't interested in the deal and wish to stay invested in Iceland, even as officials are clearly trying to push foreign investors out. What does that say about the world when some investors believe there is lower counterparty risk dealing with a government (Iceland) hostile to foreign investors than their own governments (US, UK) at home?

Iceland has rebounded since the financial crisis. The Icelandic Krona has stabilized against the Euro, the rate of change in inflation has slowed, and the country has recorded year-over-year growth in GDP each year since 2011.

http://www.zerohedge.com/news/2016-05-28/iceland-has-offered-foreign-bondholders-choice-sell-now-or-have-cash-impounded-indef
http://www.wsj.com/articles/iceland-puts-freeze-on-foreign-investors-1464366399