Icelandic power company Landsvirkjun is considering raising USD70 million via an emerging market currency-denominated medium-term note issue before year-end and likely would use currency derivatives to convert the proceeds into euros. Stefan Petursson, treasurer in Reykjavik, said the company is waiting for banks to come up with the right structure before it pulls the trigger. It would consider issuing in Hungarian forints, Czech korunas or Hong Kong dollars to achieve a better funding rate. "There is nothing that we would not look at," he added.
Landsvirkjun's target all-in funding rate ranges from six-month Euribor minus 15 basis points for six-month debt to six-month Euribor plus 2 bps for 10-year debt. Petursson said it can deal with any counterparty rated double A minus or above.
The power company has USD1 billion of outstanding debt, approximately USD200 million of which is swapped into dollars. It issued a CZK500 million (USD12.4 million) bond last June and entered a cross-currency interest-rate swap to create a synthetic euro-denominated floater after Commerzbank Capital Markets approached it with the deal in place (DW, 6/26). Petursson said this was the last bond it issued in an emerging market currency.
