Hedge Funds Asked to Take a Hit as Iceland Frees $2.4 Billion

(Bloomberg) Hedge funds will be asked to take a hit as Iceland embarks on the last crucial step in dismantling its more than seven-year-old capital control regime.

The central bank is on Thursday offering part of its foreign currency reserves in an auction to exchange $2.4 billion of mostly kronur-denominated Glacier bonds held by hedge funds including Loomis Sayles and Eaton Vance Management. They will be asked accept euros at a rate of as much as 50 percent below the official rate. The auction runs from 10 a.m. to 2 p.m. local time and the results will be published no later than June 22.

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