Iceland Debuts on the Green Bond Market with a €750 Million Issue

The Republic of Iceland has made a significant entrance into the sustainable finance world with the issuance of its inaugural green bond, raising 750 million euros (ISK 111 billion). This move underscores Iceland’s commitment to environmental sustainability and its alignment with global climate action initiatives. The bond, with a 10-year maturity, features a 3.5% fixed-rate coupon and a reoffer yield of 3.636%, attracting substantial investor interest.

The issuance, managed by leading financial institutions including JP Morgan, BNP Paribas, DZ Bank, and Nomura, was met with an overwhelming response from the market, drawing demand totaling EUR 7 billion—over nine times the issue size. This high level of interest reflects the confidence of a diverse group of investors, including central banks, official institutions, bank treasuries, insurance companies, and other institutional investors, predominantly from Northern Europe.

Minister of Finance and Economic Affairs, Thordis Kolbrun Reykfjord Gylfadottir, expressed satisfaction with the global investment community’s robust reception of Iceland’s green bond. She highlighted this success as a testament to the international credibility of Iceland’s fiscal and environmental policies. The issuance attracted approximately 280 investors, marking a record participation level for an Icelandic financial transaction and an unprecedented rate of oversubscription.

The funds raised from this green bond issuance are earmarked for financing the government’s environmental initiatives in the coming years, aligning with Iceland’s comprehensive debt strategy and its climate action plans. The strong demand and favorable terms achieved through this issuance not only reflect investors’ confidence in Iceland’s economic and fiscal stability but also bolster the country’s reputation as a leader in sustainable environmental policy.