Treasury issues eurobond with 0% coupon

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.