The decision to prepay the loans was taken following the Treasury’s European bond issue, announced on 8 July, in the amount of 750 million euros, or 116 b.kr. The bond issue gave the authorities the scope to retire the Nordic loans, which bore a higher interest rate. The bond issue and repayment do not affect the Treasury and Central Bank’s combined net debt, but they increase gross Treasury debt by approximately 1.9% of GDP, mainly because a portion of the borrowed funds are used to pay down debt recognised in the Central Bank’s accounts. The Central Bank’s foreign exchange reserves are unchanged as a result of the above debt management measure.
Further information can be obtained from Már Guðmundsson, Governor of the Central Bank of Iceland, at tel: +354 569-9600.