Foreign Borrowing

Today the Republic of Iceland issued a green bond in the amount of 750 million euros, the equivalent of ISK 111 bn. The bond bears a 3.5% fixed rate coupon, a reoffer yield of 3,636% and a 10 year maturity. The bonds are issued off Iceland´s Sustainable Financing Framework.

Investors showed remarkable interest, with demand totaling EUR 7 bn, or more than nine times the issue size. The investor group includes Central banks, official institutions, bank treasuries, insurance companies, and other institutional investors, mainly from Northern Europe. Joint lead managers for the issue were JP Morgan, BNP Paribas, DZ bank and Nomura.

“It is particularly gratifying to see the confidence shown in our first green bond issue from a broad group of international investors. It is a sign of the credibility of Iceland’s fiscal and environmental policies, which underscore the international commitments we have taken on. This keen interest is also a sign of investors’ trust in Iceland and of the country’s image as an exemplar of sound environmental policy,” said Minister of Finance and Economic Affairs, Thordis Kolbrun Reykfjord Gylfadottir.

The investor group included around 280 investors. This is the largest number of investors who have ever participated in a Republic of Iceland´s transaction, and an unprecedented eight times level of over-subscription. 

“This bond issue is in line with our Government debt strategy, as well as being part of our climate action plan. The proceeds from the issue will be used to finance the Government’s expenses due to environmental issues in coming years. This financing better enables us to face the challenges that lie ahead. Strong demand and favourable terms also bear witness to investors’ confidence in Iceland’s economic and fiscal policy,” said Thordis Kolbrun Reykfjord Gylfadottir.

Today the Republic of Iceland issued a bond in the amount of 750 million euros, the equivalent of ISK 117bn. The bond bears fixed 0% interest and is issued for seven years at a yield of 0,117%.

Investors showed keen interest, with demand totalling EUR 3.5bn, or more than four times the amount of the issue. The investor group comprises banks, insurance companies, and other institutional investors, mainly from Northern Europe. Joint lead managers for the issue were Citibank, Barclays, and Deutsche Bank.

“The investor response is a sign that the Treasury has ready access to global markets. It reflects confidence in our strength and our ability to address the economic repercussions of the global pandemic. With this bond issue, the Treasury further strengthens its long-term situation, as its liquidity position is very good at present,” said Minister of Finance and Economic Affairs Bjarni Benediktsson. 

During the book building process, the Treasury’s terms improved by 12 basis points from the initial price guidance. The buyer group included well over 150 investors.

“Today’s issue is in line with the Treasury’s debt management strategy, as the Government’s increased financing needs in coming years will partly be met with foreign borrowing or by tapping the Treasury’s foreign-denominated deposits with the Central Bank of Iceland. Market conditions are particularly favourable at present, as the terms on today’s issue demonstrate,” said the Minister.

Today the Republic of Iceland issued bonds in the amount of 500 million euros, the equivalent of ISK 76bn. The bonds bear fixed interest of 0.625% and have a 6-year maturity, offering investors a yield of 0.667%.

Investors showed keen interest, with demand totalling EUR 3.4 bn, or nearly seven times the size of the issue. The investor group comprises central banks and other institutional investors, mainly from Europe. Joint lead managers for the transaction were Citi, JP Morgan, and Morgan Stanley. 

“This issue confirms the Republic’s open access to global capital markets and demonstrates investors’ confidence in the resilience Iceland has built up in recent years. It enhances our capacity to address the repercussions of the COVID-19 pandemic and reflects our strength and our ability to overcome the economic implications,” said Minister of Finance and Economic Affairs Bjarni Benediktsson. 

During the book building process, the terms improved by some 30 basis points as demand exceeded expectation, resulting in a mere 5bp new issue premium. Almost 200 investors placed orders, almost twice as many as in the Treasury’s last bond issue in 2019.

“This issue is in line with the Treasury’s debt management strategy. It will facilitate other domestic borrowers’ access to foreign credit markets and confirms that the Republic of Iceland has ready access to a large and diverse group of investors. The markets have been lively in the recent term, as many governments are in the same position, attempting to secure long-term financing,” said Bjarni Benediktsson.

The Republic of Iceland has today concluded agreements on issuance of bonds totalling EUR 500 million, or the equivalent of ISK 71 billion.  

The bonds bear fixed interest of 0.1% and have a 5-year maturity, with a yield of 0.122%. This is the lowest yield in the history of the Republic. Investors showed strong interest in the issue, with total subscriptions around EUR 2,5 billion or five times the size of the issue.  The broad-based investor group is comprised of central banks and other institutional investors, mainly from Europe. Barclays, JP Morgan, Morgan Stanley and Nomura were joint managers for the issue.

Yesterday an offer of buy back of existing bonds of 750 million euros issued in 2014 expired. Owners of 60.5 million euros accepted the offer, in addition to those 398 million already tendered in December 2017. Owners that wished for got a priority allocation in the new bond.