Iceland Still Sees Limited Refinancing Options After Icesave WinOmar R. Valdimarsson
Iceland’s access to refinancing its bonds remains limited even after the island won a legal victory defending its treatment of foreign depositors, said Gudmundur Arnason, the permanent secretary at the Finance Ministry.
“At the moment we haven’t scheduled to refinance any debt,” Arnason said today in a telephone interview from Reykjavik. “The possibilities we have in regards to refinancing our current debts are limited.”
The European Free Trade Association Court in Luxembourg on Monday dismissed a case brought by its Surveillance Authority alleging that Iceland breached European Economic Area laws by refusing to cover U.K. and Dutch deposits in failed Landsbanki Islands hf. Losing the case could have exposed the north Atlantic island to damages as high as 335 billion kronur ($2.6 billion), or 20 percent of gross domestic product.
“This will improve our credit rating and judging by our conversations with the credit rating companies, there’s no doubt that this strengthens our position,” Arnason said. “However, the Treasury doesn’t have any immediate financing needs, quite the contrary. This puts us in a comfortable position to evaluate when we should re-enter the markets.”
Iceland has tapped international investors twice since 2008, when its economy collapsed following the failure of three of its largest lenders. The country also completed a 33-month International Monetary Fund program in 2011.
The island sold a $1 billion 10-year bond in May 2011 and a $1 billion five-year note in June 2011.
Iceland imposed capital controls in 2008 after the currency plunged 80 percent against the euro offshore.