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By Sarka Halas
LONDON, July 7 (IFR) - The Republic of Iceland is planning
its first euro-denominated bond sale since 2006, a shift away
from the US dollar funding it relied on after its banking sector
Iceland has only tapped dollars since the collapse of its
banking sector in 2008. The new euro deal will have a maturity
of six years and will be marketed via leads Barclays, Citigroup,
Deutsche Bank and JP Morgan.
"The euro bond will allow Iceland to diversify away from its
traditional US dollar investor base," said a syndicate official
working on the deal, adding that the trade will appeal to
UK-based asset managers and others who are short of euro supply.
The odd six-year maturity will be used to service a large
redemption in the form of Nordic loans that the sovereign
borrowed at the height of the crisis.
Iceland was last in the public market with a
heavily-oversubscribed 10-year dollar bond in May 2012. The
previous year, it returned to the capital markets with a
five-year issue in the currency.
The path to market, however, has not always been smooth
sailing for Icelandic names, despite the Nordic island being
heralded as a European recovery story.
In May, Arion Banki put a euro issue on hold after investor
feedback on pricing did not match its expectations, a setback
for what was expected to be the last stage in the European
banking sector recovery.
The failure was a blow for the bank and for the country, as
market participants hoped the transaction could have opened the
door for other Icelandic lenders and the sovereign.
An investor call for the new euro issue will be held today
at 1pm, while initial price thoughts could be announced as early
as this afternoon, depending on investor feedback.
Iceland is rated Baa3/BBB-/BBB (all stable).
(Reporting by Sarka Halas, editing by Julian Baker)