Iceland seeks to tap debt markets for first time in over three years

Iceland is seeking to issue international debt for the first time since mid-2014, including an offer to swap investors’ existing holdings for longer-dated paper.

The North Atlantic nation has mandated banks for a five-year euro-denominated bond issue and will be holding investor meetings in London early next week to promote the deal.

It is the first time Iceland has come to the international bond markets since it raised €750m in July 2014; holders of those notes – which are set to mature in 2020 – are being offered the chance to swap them for the new debt.

A series of new and infrequent sovereign issuers have raised debt in the capital markets in recent months, aided by heavy investor demand for relatively high-yielding government debt.

Iceland lifted capital controls this spring, nearly nine years after its devastating banking crash. In the wake of its 2014 capital-raising, Icelandic banks also returned to the markets.

The country’s recent election produced an inconclusive result, after which a fragile left-right “grand coalition” has emerged. Iceland’s economy is cooling after posting rapid growth in recent years, thanks to its booming tourism industry.

Iceland is rated A3 stable by Moody’s, A stable by S&P Global and A- positive by Fitch.

Barclays, Citi, Deutsche Bank and Nomura have been mandated as joint lead managers on the deal.