INTERVIEW: Iceland Min: "Open" To Bond Markets, Will Seek Longer Issuances

Iceland likely to seek a 10-year issuance, no date specified

--Iceland's GDP to grow 2.5% in 2012
--Replacing Icelandic krona with Canadian dollar "off the table"



TORONTO (Dow Jones)--Iceland remains "open" to tapping international debt markets and will likely pursue issuing longer government notes when it follows up last year's successful bond offering, Steingrur Sigfusson, Iceland's minister of economic affairs, said in an interview.

With Iceland's "somewhat improved (credit) ratings" and easing credit-default swaps, the country's financial situation "has improved", said Sigfusson. The decision to move toward another government bond issuance is "kept open and we would most likely go for a longer duration of the issuance," specifically, a 10-year note, he said. He didn't specify when Iceland would decide to issue another bond.

Last July, Iceland returned to the bond market after a two-year absence. It successfully issued a five-year bond worth US$1 billion, which was twice oversubscribed by investors.

After paying off nearly a fifth of its loans from the International Monetary Fund and Nordic neighbors this month, Iceland won't likely continue to repay remaining debt at that same pace "for a while," Sigfusson said.

Iceland has repaid 116 billion Icelandic kronas (US$909 million), an amount that was paid earlier than expected.

Sigfusson said the government forecasted that Iceland's gross domestic product will grow at 2.5% this year, driven largely by the country's fisheries and tourism industries.

Separately, Sigfusson ruled out the idea of Iceland adopting the Canadian dollar, a move that some fringe opposition politicians have recently floated. The idea is "theoretical speculation more than practical realities," he said.

The Icelandic krona has lost about half of its value since 2008, when its banks collapsed during the global financial crisis. At the time, opposition politicians and a handful of academics and economists started floated the idea of adopting the Canadian currency, seizing on the relative stability of the loonie and some similarities between the two northern countries' economies.

Although Sigfusson said he is an "admirer" of how Canada has fared economically over the past several years, replacing the krona with the loonie is "not on the table." The government is evaluating whether it will keep the krona or adopt the euro if Iceland succeeds in ascending to the European Union, he said.

Adopting the Canadian dollar is "not a ridiculous idea in my mind, but neither is it for the time being something we are considering as the government," said Sigfusson.