Landsvirkjun successfully issues Green Bonds in the US Private Placement market

Landsvirkjun has signed an agreement with US and UK institutional investors to issue USD 150 million senior unsecured notes in the US Private Placement (“USPP”) market in Green Bond format. The notes have been issued under the company’s updated Green Finance Framework (“GFF”) with proceeds to be used to finance and refinance green assets on the company’s balance sheet. Landsvirkjun is among the first companies globally to apply this new balance sheet approach in its GFF. The notes are issued without a state guarantee of collection.

The offering was very well received, with the order book totalling USD 545 million, representing over 5x oversubscription from the launch size of USD 100 million. The notes have a 9-year maturity and carry a fixed interest rate of 2.79% for a November 2020 draw date and 2.84% for a February 2021 draw date, with semi-annual interest payments.

As part of the transaction, Landsvirkjun has updated its Green Finance Framework. Eligible assets comprise all items on the balance sheet supporting Landsvirkjun’s renewable energy generation activities. This new approach is particularly suitable for pure-play companies such as Landsvirkjun.

The issuance demonstrates Landsvirkjun’s continued commitment and focus on sustainable development and follows the execution of a USD 80 million sustainability linked USPP earlier in 2020, a USD 150 million sustainability-linked revolving credit facility in 2019 and the successful placing of a USD 200 million green bond in the USPP market in 2018.

BNP Paribas and ING acted as joint placement agents in this transaction. ING acted as the sole green structuring advisor.

Focus on debt reduction

In recent years Landsvirkjun’s financial position has strengthened considerably and emphasis has been placed on reducing debt. Since 2010 net debt has decreased by more than USD 1 billion. During this period total investments were around USD 1.3 billion, mainly due to the construction of three new power stations, Budarhals, Þeistareykir and Burfell II. Despite challenging economic conditions in the first half of 2020, net debt decreased by USD 60 million to approx. USD 1.6 billion in the period and Landsvirkjun expects net debt to continue to decrease going forward.

New debt without guarantee of collection

Since 2011, all new long-term debt has been issued without a state guarantee of collection. Furthermore, Landsvirkjun has systematically reduced the amount of guaranteed debt by prepaying and removing the guarantee of collection from existing financing agreements. Since 2010, guaranteed debt has decreased by approx. USD 2.5 billion, thereof by approx. USD 180 million in 2020. The last guaranteed debt matures in 2026 following which none of Landsvirkjun’s financing agreements will be state guaranteed.

Rafnar Larusson, Landsvirkjun’s CFO: “The transition to renewable energy, away from fossil fuels, is a vital and essential part of the fight against climate change. The Green Bond market is an important way to promote the production of renewable energy, thereby providing a valuable boost to the world’s inevitable energy transition. We are proud to be part of this rapidly growing market, having been Iceland’s first issuer of Green Bonds and continuing our efforts with this successful offering. The USPP market has proven to be a reliable funding source for Landsvirkjun. We appreciate the commitment and continued support from our current investors, as well as the interest we received from new investors.”


Landsvirkjun is owned by the Icelandic State. The company generates over 70% of all electricity used in Iceland from 100% renewable energy sources, hydro, geothermal and wind. The company operates eighteen power stations; fifteen hydropower stations and three geothermal power stations, as well as two wind turbines.

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