06 May 2011

Treasury prepays bonds for 346 million euros (57 b.kr.)

In a tender among investors in Treasury bonds that closed yesterday, the Central Bank of Iceland, on behalf of the Treasury, agreed to purchase, at par value, foreign Treasury bonds maturing in 2011 and 2012 for just approximately 346 million euros (roughly 57 b.kr.). The two bonds in question were issued by the Treasury in euros, in the original nominal amounts of 1,000 million euros and 250 million euros (total 204 b.kr.). The Central Bank had already purchased a portion of these bonds in the market. Prior to yesterday’s purchase, approximately 800 million euros (130 b.kr.) were outstanding. Remaining after the auction is a total of 454 million euros of these bonds, maturing in 2011 and 2012. The purchase is an element in the Treasury’s liquidity and debt management strategy and the Central Bank of Iceland’s reserve management strategy.

As was stated in a Central Bank press release published on 15 April 2011, the Bank’s foreign exchange reserves amounted to 767 b.kr. (4.7 billion euros) as of end-March 2011. The Central Bank and the Treasury are therefore in a strong position to repay foreign loans maturing in coming years, including the aforementioned bonds. The repurchase also provides an opportunity to improve returns on the foreign exchange reserves in the current low-interest environment.

Further information can be obtained from Már Guðmundsson, Governor of the Central Bank of Iceland, at tel: +354 569-9600.


No. 12/2011
6 May 2011