Republic of Iceland issues first ever green bond

Iceland continues to set the pace on the sustainable transition with its first ever green bond.


In March, Iceland successfully issued a record-breaking inaugural green bond with a EUR750 million 10-year benchmark due 21 March 2034.

The issuance achieved the country’s largest ever investor interest for a EUR transaction with a final order book more than EUR7 billion and over 270 accounts participating, representing an oversubscription rate of more than nine. Demand came from all corners, with strong investor representation across Europe and Asia. 

This demand is evidence of the global recognition of Iceland’s commitment to sustainability and the credibility of its long-term vision of a resilient and low-carbon economy.

A global leader in sustainability and a growing economy

Following the 1973 oil crisis Iceland pivoted from oil to hydropower and geothermal heat. The country put funding and resources into searching for new geothermal resource areas and built new heating services and transmission pipelines from thermal fields into towns, villages and farms.

Fast forward to today and Iceland is now working towards a target of carbon neutrality before 2040, and to cut greenhouse gas emissions by 40% by 2030 under the Paris Agreement.

The country now produces 99.99% of its electricity using renewable energy and 97.4% of the heating used is provided by geothermal energy. This is the highest share of renewable energy in any national total energy budget.

According to S&P Global the country has been only marginally affected by the impact of recent energy price turbulence. In November, S&P Global upgraded Iceland’s credit ratings to A+ citing, amongst other things, that Iceland remains self-sufficient in meeting its domestic energy needs, mainly through local hydropower and geothermal sources.

With this resilient economic backdrop, Iceland issued its first ever green bond, which through its Sovereign Sustainable Financing Framework (the “Framework”) will help to finance the country’s ongoing transition. 

It is particularly gratifying to see the confidence shown in our first green bond issue from a broad group of international investors. It is a sign of the credibility of Iceland’s fiscal and environmental policies, which underscore the international commitments we have taken on. This keen interest is also a sign of investors’ trust in Iceland and of the country’s image as an exemplar of sound environmental policy.

Thordis Kolbrun Reykfjord Gylfadottir
Minister of Finance and Economic Affairs, Republic of Iceland

Financing continued innovation

Funding will be used to finance further progress towards carbon neutrality. This includes investments in green projects such as infrastructure for bicycles and electric bikes, the energy transition of vehicles and infrastructure, green buildings, and adaptation to the circular economy. Social projects are also included in the Framework, and in April 2023 it was updated to ensure alignment to the EU Taxonomy and to include guidance on Financing for Gender Equality.

BNP Paribas is delighted to participate in the Republic of Iceland’s inaugural green bond, which garnered the largest ever number of investors and a record breaking orderbook over EUR7 billion, illustrating investor support towards Iceland’s commitment to sustainability. Many congratulations to the Iceland team for all the hard work in making the return to the EUR market a remarkable result.

Myriam Zapata
Managing Director ESG SSA DCM at BNP Paribas