Iceland mulls bond issue as crisis abates


Iceland is considering a return to the international debt market, according to media reports, as efforts by the country to get back on its feet after its drastic financial crash of 2008 continue.

A sale of six-year euro-denominated bonds is being mulled by the Republic of Iceland, according to Reuters IFR. The capital markets news wire said Barclays, Citigroup, Deutsche Bank and JPMorgan had been hired to run the sale, with an investor call due to take place at 1.00 p.m. BST on Monday.

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Snowy road curving past the mountains, Iceland.
Thomas Kokta | Peter Arnold | Getty Images

The Central Bank of Iceland, which has managed the country's government debt since 2007, had no comment on the reports.

A successful government bond auction would mark a considerable boost in confidence in the country, which is still reeling from the impact of a recent financial crisis. The country last raised money in this way in 2012, when it sold $1 billion in 10-year dollar debt.

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In 2008, Iceland's three major banks proved too big to save, and the government allowed them to collapse rather than bailing them out. The move sent the country into financial meltdown, which saw a 90 percent plunge in the country's stock market between October and December 2008. Strict capital controls were also imposed in an effort to prevent a capital slight by foreign investors, and continue to this day.

Iceland was forced to request assistance from the International Monetary Fund, although it exited this aid program earlier than expected in 2011.

Other crisis-hit countries – such as the euro zone's Ireland, Portugal and Greece – have already made a return to the debt market.