See important disclosures on page 3 of this report Icelandic Corporate Bonds Corporate bonds issuance has grown fast over the last few years and in the end of August 2007 it was already more than the issuance for the whole year 2006. The turnover has also increased substantially, or about 114% from the first nine months last year. Kaupthing Research has issued a publication containing coverage of eleven companies which have all issued corporate bonds. The companies are Exista, FL Group, Landsvirkjun, Bakkavör Group, Atorka Group, Stoðir, Síminn (Iceland Telecom), Nýsir, Icelandair Group, Eyrir Invest and Norvik Banka. The publication covers the credit profile of the companies, such as the company's profile, its credit summary, debt maturity as well as showing figures from the Income statement, the Balance sheet and some financial ratios. Coverage for Icelandic companies which have issued bonds can be expected periodically in the near future. • Exista is a financial service company. It is the largest issuer of corporate bonds on the Icelandic market, with an outstanding nominal value of ISK 70.4 billion. • FL Group is an investment company and it has issued corporate bonds with an outstanding nominal value of ISK 35 billion. • Landsvirkjun produces, distributes and sells wholesale electricity. It has issued corporate bonds with an outstanding nominal value of ISK 25.5 billion. • Bakkavör Group is a food manufacturing company. It has issued corporate bonds with an outstanding nominal value of ISK 20.7 billion. • Atorka Group is an investment company and it has issued corporate bonds with an outstanding nominal value of ISK 19 billion. • Stoðir is a real-estate company which has grown rapidly through the years. It has issued corporate bonds with an outstanding value of ISK 18.5 billion. • Síminn is the largest telecommunications company in Iceland. It has issued corporate bonds with an outstanding nominal value of ISK 14 billion. • Nýsir is an international group engaged in property investments and developments, PFI/PPP projects and related services. It has issued corporate bonds with an outstanding nominal value of ISK 8 billion. • Icelandair Group is a holding company focusing on airline and tourism sectors. Its corporate bonds have an outstanding nominal value of ISK 6.2 billion. • Eyrir Invest is an international investment company. It has issued corporate bonds with an outstanding nominal value of ISK 6.1 billion. • Norvik Banka is a Latvian bank. It has issued bills with an outstanding nominal value of ISK 1.7 billion. Research in Iceland: Ásgeir Jónsson [email protected]Tel. +354 444 6957 Linda Garðarsdóttir [email protected]Tel. +354 444 6965 Fixed Income Sales: Stefán Ákason [email protected]Tel. +354 444 7311 Gísli Hauksson [email protected]Tel. +354 444 7315 Agnar T. Möller [email protected]Tel. +354 444 7316 Bergthór Ólason [email protected]Tel. +354 444 7306 Hulda Pjetursdóttir [email protected]Tel. +354 444 7313 Stefnir Agnarsson [email protected]Tel. +354 444 7308 Editor: Ásgeir Jónsson [email protected]Tel. +354 444 6957 The Icelandic Corporate Bond Market 12 October 2007
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See important disclosures on page 3 of this report
Icelandic Corporate Bonds
Corporate bonds issuance has grown fast over the last few years and in the end of August 2007 it was already more than the issuance for the whole year 2006. The turnover has also increased substantially, or about 114% from the first nine months last year.
Kaupthing Research has issued a publication containing coverage of eleven companies
which have all issued corporate bonds. The companies are Exista, FL Group,
The Icelandic corporate bond market Corporate bond issuance has grown rapidly in the last few years. Bond issuance of both unlisted and listed on OMX Nordic Exchange Iceland amounted to at least ISK 168.5 billion from January to August 2007. That is a 15.6% increase from the whole year 2006 and a 67.2% increase from the whole year 2005. Corporate bonds' turnover has also increased during the first nine months in 2007 and the growth is 114% from the same time last year. The turnover is already the same as it was for the whole year 2006.
Bond issuance, unlisted and listed on OMX Nordic Exchange Iceland (ISKbn)
20
40
60
80
100
120
140
160
180
2000 2001 2002 2003 2004 2005 2006 2007*
MunicipalitiesBanks, savings banks and other loan institutionsHFF bonds, housing bonds and housing authority bondsCorporate issuersTreasury notesForeign issuers
Source: Central Bank of Iceland
HFF and Housing Authority bonds have the most market value on the Icelandic bond
market or 31.2% at the end of September 2007. However corporate bonds have been
gaining on HFF bonds for some time. Now corporate bonds represent 26.3% of the total
market value of the Icelandic bond market compared to 21.6% at the end of May 2007,
a number which we published in our last coverage of Icelandic corporate bonds.
If we only look at the corporate bond market, which includes bank/savings bank bonds,
leasing company bonds, corporate bonds, loan institution bonds, municipal bonds and
foreign bonds; corporate bonds have the most market value or 51%.
Icelandic bond market - % of total market value
Premium Bonds, 2.9%
HFF and Housing Authority Bonds,
31.2%
Treasury Bills, 0.9%
Leasing Company Bonds, 0.3%
Other Corporate Bonds, 26.3%
Loan Institution Bonds, 2.1%
Bank Bills, 6.2%
Treasury Bonds, 1.1%Foreign Bonds,
2.8%Municipal Bonds, 1.5%
Treasury Notes, 6.1%
Bank/Savings Bank bonds,
18.6%
Source: OMX Nordic Exchange Iceland
*January - August
Credit Research • October 2007 • Page 3 of 29
Real yields have risen The credit spreads on unrated bonds of longer maturities (3 years or longer) are on
average slightly above 200 basis points, as compared to the yields on HFF bonds
(housing bonds and housing authority bonds). The interest rate on HFF bonds has
increased for the last few years as The Central Bank of Iceland has increased its interest
rate. In the picture below a substantial increase in yield on HFF bonds can been seen in
autumn 2005. The Central Bank of Iceland began to raise their interest rate in 2004 but
inflation expectations increased faster than the Central Bank's interest rate and
therefore rate hikes did not manage to raise real yields until late 2005. Another increase
in yield on HFF bonds occurred in October 2006 when the Icelandic government
announced its intention to decrease food taxes in March 2007, thus lowering short term
inflation expectations. Yields fell somewhat in August 2007 as the Icelandic Krona took
a tumble and inflation spiked in September. However, as the Krona has regained
strength and rates will probably not be reduced until Q2 2008, HFF yields have reached
new heights after a strong sell-off in the end of September and beginning of October.
Ratings on Icelandic corporate bonds compared to their spreads
based on recent trading and Kaupthing Research's estimates
1y spreads 5y spreads Rating Classification
Exista 1.40% 1.75% BBB-/BB+ Financial
Landsvirkjun 0.20% 0.40% AAA/AA+ Industrial
Bakkavör Group 1.50% 2.50% BB+/BB Industrial
FL Group 2.50% 3.50% B+/B Financial
Atorka Group 2.25% 3.50% BB-/B+ Financial
Stoðir 2.10% 3.00% BB/BB- Financial
Síminn 1.50% 2.50% BB+/BB Industrial
Icelandair Group 1.90% 2.80% BB- Industrial
Nýsir 2.25% 3.50% BB-/B+ Financial
Norvik Banka 1.20% N/A BBB+ Financial
Eyrir Invest 2.25% 3.50% BB-/B+ Financial Source: Kaupthing Research
Credit Research • October 2007 • Page 5 of 29
Fluctuation on the CDS spreads
Markets have been fluctuating a lot since middle of July which results in fluctuation in
the credit default swaps (CDS spreads) of many companies. The reason for the
fluctuation is mainly because of sub-prime loans crisis in USA. Recently the CDS
spreads have been going down again as markets have been stabilising. Below we see
three pictures of the CDS spreads for several foreign banks, technical and food
companies. The largest fluctuation was in the banking sector but companies in other
industries experienced it as well.
Credit default swap (CDS) for several banks – 5 years
0
10
20
30
40
50
60
7001.0
6.0
7
08.0
6.0
7
15.0
6.0
7
22.0
6.0
7
29.0
6.0
7
06.0
7.0
7
13.0
7.0
7
20.0
7.0
7
27.0
7.0
7
03.0
8.0
7
10.0
8.0
7
17.0
8.0
7
24.0
8.0
7
31.0
8.0
7
07.0
9.0
7
14.0
9.0
7
21.0
9.0
7
28.0
9.0
7
05.1
0.0
7
Commerzbank
Barclays
ABN Amro
Credit Suisse
UBS
Source: Bloomberg
Credit default swap (CDS) for several technical companies – 5 years
0
5
10
15
20
25
30
35
40
45
01.0
6.0
7
08.0
6.0
7
15.0
6.0
7
22.0
6.0
7
29.0
6.0
7
06.0
7.0
7
13.0
7.0
7
20.0
7.0
7
27.0
7.0
7
03.0
8.0
7
10.0
8.0
7
17.0
8.0
7
24.0
8.0
7
31.0
8.0
7
07.0
9.0
7
14.0
9.0
7
21.0
9.0
7
28.0
9.0
7
05.1
0.0
7
STMICRO
PHILIPS ELEC
NOKIA
SIEMENS
Source: Bloomberg
Credit Research • October 2007 • Page 6 of 29
Credit default swap (CDS) for several food companies – 5 years
0
10
20
30
40
50
60
70
80
90
01.0
6.0
7
08.0
6.0
7
15.0
6.0
7
22.0
6.0
7
29.0
6.0
7
06.0
7.0
7
13.0
7.0
7
20.0
7.0
7
27.0
7.0
7
03.0
8.0
7
10.0
8.0
7
17.0
8.0
7
24.0
8.0
7
31.0
8.0
7
07.0
9.0
7
14.0
9.0
7
21.0
9.0
7
28.0
9.0
7
05.1
0.0
7
NESTLE
CADBURRY SCHWEPPES
UNILEVER NV
TATE & LYLE
Source: Bloomberg
Credit Research • October 2007 • Page 7 of 29
Issuers of Icelandic corporate bonds Companies from various industries have issued corporate bonds through the years. Prominent industries are e.g. the fishery and fish processing industry, real-estate industry, manufacturing and energy industry. Investment and/or holding companies as well as heating utilities have also been very active in issuing bonds. A large number of companies have listed their bonds on the OMX Nordic Exchange Iceland. The number of issues listed totalled 92 on 10 October 2007.
Issuers of corporate bonds (as of 10 October 2007) Outstanding nominal value (ISKm)
No. of issues Internet home page Industry
Exista hf. 70,380 8 http://www.exista.com Financial service company
FL GROUP hf. 35,000 4 http://www.flgroup.is Investment company
Landsvirkjun 25,500 3 http://www.landsvirkjun.com Electricity, gas and water supply
Exista is a financial services company with operations in the areas of insurance, asset financing and investment activities. The company is a leading insurance underwriter in Iceland, as well as the country's largest provider of asset finance products. Exista was listed on OMX Nordic Exchange Iceland (previously named The Iceland Stock Exchange) 15 September 2006.
As an international investor, Exista has strategic holdings in several companies, including Sampo Group, Kaupthing Bank, Bakkavör Group and Iceland Telecom.
Exista's goal is to use its financial strength for the further development of its business in Northern Europe.
Credit Summary
Exista has six listed outstanding bonds. Two of them are non-indexed zero coupon bonds with maturity in October 2007 (EXIS 07 1029) and March 2008 (EXIS 08 0317).
The bond EXISTA 07 2 bears a liquid interest rate of 3M REIBOR + 1.5%. It will mature 29 May 2009. The bond EXISTA 04 1 is linked to the Consumer Price Index and bears 5.9% interest rate. The bond EXISTA 06 3 bears 15.1% interest rate paid annually. The bond EXISTA 07 1 bears 7% interest rate and will mature 22 June 2014.
Two additional non-indexed zero coupon bonds will be listed at later stages with maturity in April 2008 (EXIS 08 0408) and October 2008 (EXIS 08 1008).
Further Information
§ Kaupthing Research
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- EXIS 07 1029
- EXIS 08 0317
- EXISTA 07 2
- EXISTA 04 1
- EXISTA 06 3
- EXISTA 07 1
Debt Maturity
0
15,000
30,000
45,000
60,000
75,000
90,000
105,000
120,000
135,000
150,000
165,000
2007 2008 2009 2010 2011 2012* 2013 2014
ISKm
EXISTA 07 1
EXISTA 06 3
EXISTA 07 2
EXIS 08 0317
EXIS 07 1029
EXIS 08 1008
EXIS 08 0408
EXISTA 04 1
Long-term debt
*Borrowings in 2012 will mature that year or later.
Recent News
On 31 August 2007, Exista signed a new EUR 500 million senior unsecured credit facility. The term loan has two tranches: a EUR 407.5m tranche for three years at 1.3% over EURIBOR and a EUR 92.5m tranche for one year at 0.625% over EURIBOR.
On 10 August 2007, Sampo announced to the Helsinki Stock Exchange that the total number of Sampo A-shares controlled by Exista has risen to 20% of Sampo's issued share capital.
Company Profile
Q3 interim statement – 25 October 2007
Q4 and annual results – 31 January 2008
Annual meeting – 14 March 2008
Exista – Financial Services Company www.exista.com
FL Group is an international investment company and focuses its activities primarily on two functions, private equity and capital markets. The company's geographic focus lies within Northern Europe but special emphasis has been put on the Nordic countries and the UK.
FL Group has holdings in companies in various sectors in Iceland, the UK, the Netherlands and the Nordic countries. The majority of its investments are in listed companies in the banking and financial services. Other investments are in beverages, airlines and retail. Its main listed holdings are Glitnir, Commerzbank, AMR Corp., Finnair, Royal Unibrew, Aktiv Kapital and Tryggingamidstodin (TM). Its unlisted holdings are e.g. Refresco, Northern Travel Holding, Reykjavik Energy Invest among others.
FL Group has four main divisions, i.e. Private Equity, Capital Markets, Finance and Operation Management. The Private Equity team deals with the company's investments in its operating companies, transformation projects and investments where a significant or controlling share in a company is held. Capital Markets unit oversees the company's short term trading in listed securities and currencies as well as overseeing the company's derivative and security trading related to the company's asset portfolio. Finance & Administration is a support function for the company and the Operation Management team helps the company to participate actively in the operations of the companies invested in. FL Group has set up offices both in Denmark and the UK.
Credit Summary
FL Group has four listed outstanding bonds. The first two (FL 07 1112 and FL 08 0516) are non-indexed zero coupon bonds and will mature 12 November 2007 and 16 May 2008. The third one (FL 08 0320) bears a liquid interest rate of 3M REIBOR + 1.95%. The fourth one (FL 05 1) bears 5% interest rate, paid annually.
*Borrowings in 2012 will mature that year and later.
Organisational Structure
Financial Calendar
Q3 interim account – 29 Oct. – 2 Nov. 2007
Q4 and annual results – 28 Jan. – 1 Feb. 2008
Annual meeting – 22 February 2008
Recent News
On 4 October 2007, Reykjavik Energy Invest and Geysir Green Energy announced their agreement to merge the two companies under the name Reykjavik Energy Invest. The merger will create a global leader in the field of geothermal energy. FL Group will be the second largest shareholder with an ownership of 27% of the company's shares.
On 17 September, FL Group signed an agreement to several companies to buy all their shares in Reykjavik based insurance company TM, all in all 46.2% of TM's shares. Prior to this transaction FL Group held 37.6% of the shares in TM so it now controls 83.7%.
Landsvirkjun (The National Power Company) was founded on 1 July 1965, on the basis of plans to step up harnessing of hydropower through development of power-intensive industries as well as meeting rapidly growing demand from the ordinary market. As of 1 January 2007, the Icelandic State became sole owner of Landsvirkjun. Landsvirkjun produces, distributes and sells wholesale electricity mainly to local public utilities. Landsvirkjun produces about 82% of Iceland's electricity.
Landsvirkjun may from time to time issue notes (EMTN) denominated in any currency agreed between the issuer and the relevant dealer. EMTN notes can be traded on the Luxembourg Stock Exchange's regulated market and can be listed on the Luxembourg Stock Exchange.
Credit Summary
Landsvirkjun has issued three bonds, all indexed through the Consumer Price Index (CPI). The first bond, LAND 97 1, was issued 19 September 1997 and will mature in 5 years from now or 19 September 2012. The bond bears 5% interest rate, paid at maturity. The second bond, LAND 98 1, was issued 24 August 1998 and matures 24 August 2013. The bond bears 4% interest rate, paid at maturity. The third bond, LAND 05 1, was issued 21 March 2005 and bears a fixed 3.5% annual interest rate, paid annually. The bond will mature 21 March 2020.
The Icelandic Electricity Market
With the Icelandic Electricity Act no. 65/2003, adopted on 15 March 2003, substantial changes were made on the organisation of the electricity market. The law is in conformity with the EU electricity directive from 1996. The purpose of the Act is to enable competition in the sales of power. It became effective in stages until 1 June 2006 when the full opening of the market took place. The Act stipulates that an independent TSO operates the grid and a separation between generation, transmission, distribution and supply of electricity takes place.
Further Information
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- LAND 97 1
- LAND 98 1
- LAND 05 1
Debt Maturity
0
5
10
15
20
25
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026
ISKbn
EMTN
LAND 05 1
LAND 98 1
LAND 97 1
Company Structure
The company is divided into six divisions: Corporate Office, Finance, Energy, Engineering and Construction, Information System and Human Resources.
The role of the Finance Division is to manage the company's finances and provide its management with services which increase operational efficiency. The role of the Energy Division is to generate electricity at optimum efficiency and deliver it into the Landsnet transmission grid in line with customer orders at the time. The Engineering Division handles project management and consultancy.
Credit Rating
Landsvirkjun has a credit rating from Moody's and Standard & Poor's.
Moody's Standard&Poor's
Short-term P-1 A-1
Long-term Aaa/Stable A+/Stable
Recent News
On 27 August 2007, Landsvirkjun and Norðurál announced they have signed an agreement in which the energy provider will supply the Grundartangi aluminium smelter with electricity in the short-term, during 2007 and 2008.
Landsvirkjun – Electricity, Gas and Water Supply www.landsvirkjun.com
Bakkavör Group is an international food manufacturing company specialising in fresh prepared foods and produce. The corporation operates around 50 factories and employs over 17,000 people in eight countries. Its pro forma turnover was £1.2 billion in 2006. The Group's Head Office is in Reykjavik, Iceland.
Bakkavör Group was founded in 1986. During this time, the business has grown significantly and today Bakkavör Group is the largest provider of fresh prepared foods and produce in the UK.
In addition to the UK and Iceland, the Group also has business operations in France, Belgium, Spain, South Africa and China and is well-positioned for further expansion.
In total, the Group makes over 4,700 products in 17 product categories, which are developed and sold predominantly under its customers' own brands. Bakkavör Group has attained leading market positions in its key market areas of ready meals, pizzas, convenience salads and leafy salads.
Credit Summary
Bakkavör Group has two outstanding bonds which both are linked to the Consumer Price Index (CPI). The former bond (BAKK 03 1) was issued 15 May 2003 and will mature 15 May 2009. The bond bears 6.7% annual interest rate, which will be paid on the maturity date.
The second bond (BAKK 05 1) was issued 1 June 2005 and will mature 1 December 2010. The bond bears 5.4% annual interest rate, which will be paid at maturity.
Further Information
§ Kaupthing Research
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- BAKK 03 1
- BAKK 05 1
Debt Maturity
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2007 2008 2009 2010 2011 2012
ISKm
BAKK 05 1
BAKK 03 1Borrowings
Sales by geographical market in H1 2007
United Kingdom92.1%
Asia0.1%
Continental Europe7.8%
Financial Calendar
Q3 interim account – 25 October 2007
Q4 and annual results – 31 January 2008
Annual meeting – 23 March 2008
Recent News
On 5 October, Bakkavör announced its acquisition of Welcome Food Ingredients Ltd., a UK flavourings and sauce producer. The consideration price, which is confidential, was financed through and paid by the Group's own cash resources.
Bakkavör Group – Food Manufacturer www.bakkavor.com
Atorka Group is an international investment company. Atorka's main focus is to invest in progressive and well-managed companies that operate in growing markets. Atorka's aim is to take such companies to recognizable world leadership and support their growth. Atorka is listed on the OMX Nordic Exchange Iceland and is included in the OMXI15 index. Atorka's shareholders are around 5,000.
Credit Summary
Atorka has six outstanding bonds. The first bond ATOR 07 1115 is a zero coupon bond and will mature 15 November 2007. The second bond ATOR 07 1 bears a liquid interest rate of 3M REIBOR + 2.9% and will mature 7 August 2008. The bond ATOR 07 2 was issued 16 May 2007 and bears a liquid interest rate of 3M REIBOR + 1.95%.
The bond ATOR 06 1 bears a liquid interest rate of 3M REIBOR + 1.8%. It is a non-indexed bond and will mature 26 April 2009. The bond ATOR 04 1 bears 5.2% interest rate and will mature 15 October 2010. The last bond ATOR 05 1 was issued 15 March 2005 and bears 5.0% interest rate paid annually.
Recent News
On 4 October 2007, Reykjavik Energy Invest and Geysir Green Energy announced their agreement to merge the two companies under the name Reykjavik Energy Invest. The merger will create a global leader in the field of geothermal energy. Atorka will be the third largest shareholder with an ownership of 20% of the company's shares.
On 1 August 2007, Atorka announced it had concluded the sale of its entire holding in Iceland drilling, through its company Renewable Energy Resources, together with a 16% share in Enex, to Geysir Green Energy (GGE). Simultaneous with the sale, Atorka has purchased a 32% stake in GGE and will therefore be a primary investor in the company.
Financial Calendar
Q3 interim account – Week 47 2007
Q4 and annual results – Week 8 2008
Annual meeting - 6 March 2008
Debt Maturity
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2007 2008 2009 2010 2011 2012
ISKm ATOR 07 1
ATOR 07 2
ATOR 07 1115
ATOR 06 1
ATOR 05 1
ATOR 04 1
Borrowings
Group Structure
Further Information
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- ATOR 07 1115
- ATOR 07 1
- ATOR 04 1
- ATOR 05 1
- ATOR 07 2
- ATOR 06 1 .
Atorka Group
Private Equity Strategic Investments
Reykjavik Energy Invest (20%)
Promens (63%)
Interbulk (40%)
Amiad Filtration (20%)
NWF Group PLC (21%)
(20%)
Pioneer (100%)
A. Karlsson (100%) Clyde Process Solutions (30%)
Romag (20%)
Atorka Group – Investment Company www.atorka.is/en
On 3 May 1999 Stoðir Real Estate Inc. was founded and in May 2002 it merged with Þyrping hf., a property company. Þyrping was the larger party in the merger and had been operating since 1991. The merger created the largest real-estate business in Iceland.
Stoðir has through the years focused on acquiring real estate which is leased to public authorities, as it views them as reliable tenants.
At the end of 2005, Stoðir Real Estate acquired the Danish real estate company Atlas Ejendomme A/S. This acquisition strengthened the company as Atlas Ejendomme owns more than 150 thousand square metres of property, mainly in the centre of Copenhagen, and as the Danish state is the largest tenant.
In September 2007, Stoðir announced it holds 96.72% of the issues shares and voting rights of Keops, Denmark's largest listed property group. Stoðir intends to initiate a compulsory acquisition procedure to acquire the remaining shares. The Supervisory Board of Keops has authorised to request for the company's shares to be delisted from OMX Nordic Exchange Copenhagen A/S.
Now Stoðir is among the largest real estate companies in Scandinavia with a substantial market share in Sweden and Denmark and market leader in Iceland. The company has 600 properties in Sweden, Denmark, Iceland and Finland with a 2.8 million square meters of rental space and more than 3,800 tenants.
Credit Summary
Stoðir has issued four bonds since its foundation. The first bond (STOD 08 0125) is a zero coupon bill and was issued 26 January 2007. The bond will mature 25 January 2008.
The second bond (STOD 03 1) is an index-linked interest-paying bond, issued 5 February 2003. The bond bears 7.4% annual interest payable on 5 February, for the first time in 2004 and finally in 2011.
The third bond (STOD 06 2) is a non-indexed bond. It was issued 21 August 2006 and will mature 21 August 2011. The bond bears liquid interest rate of 3M REIBOR+1.9%, which will be paid at maturity.
The fourth bond (STOD 06 1) was issued 28 March 2006 and is an index-linked bond. The bond bears 6% interest rate paid annually. The bond will mature 28 March 2013.
Debt Maturity
0
6,000
12,000
18,000
24,000
30,000
36,000
42,000
48,000
54,000
60,000
66,000
72,000
78,000
84,000
2007 2008 2009 2010 2011 2012 2013*
ISKm
STOD 06 2
STOD 08 0125
STOD 06 1
STOD 03 1
Long-term debt
*Borrowings in 2013 will mature that year and later
Further Information
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- STOD 03 1
- STOD 06 2
- STOD 06 1
Breakdown of revenues by type of property in 2006
Offices 38%
Retail 43%
Hotels 8%
Residential 9%
Warehouse 2%
Stoðir – Real estate, renting and business activities www.stodir.is
Siminn provides all telecommunication, mobile and Internet services to private and corporate clients in Iceland. Its range of services and solutions includes fixed and mobile subscriptions as well as Broadband/DSL solutions, Live TV and Centrex network solutions. In July 2005 the Icelandic government privatized Siminn and sold its 98.8% share to Skipti ehf. The price for Siminn was ISK 66.7 billion. In December 2005, three companies Siminn, Íslenska sjónvarpsfélagið (The Icelandic Television Company) and the parent company, Skipti, merged into one, under the name Siminn. In March 2007 the following propositions of Siminn's board were approved: A new parent company called Skipti hf. was introduced with an ownership of 95% of Siminn's shares and Siminn was split into three companies: Siminn hf the main operating company; Jörfi Real Estate, and Mila which owns and operates the national trunk and access networks in Iceland. The largest shareholders in Skipti are Exista B.V. 43.6% and Kaupthing Bank hf. 29.1%.
Credit Summary
Siminn issued a bond (SIMI 06 1) 2 January 2006. The bond is indexed to the Consumer Price Index and it bears 6% annual interest rate, paid semiannually. Its maturity date is 2 April 2014. The parent company Skipti has now taken over Siminn's bond.
The Icelandic Telecom Market
Before 1998, the Icelandic telecom market was very uncompetitive; in fact a monopoly cared for most of Iceland's telecommunications services named Landssíminn or Iceland Telecom Ltd.
In 1998, a new law was passed which opened the market for competition. The first competitor was TAL, which focused at first mainly on mobile services. Others followed, the biggest one being Íslandssími. In the internet (ISP) market the competition was a lot tougher, with companies like e.g. Íslandssími, Halló!, Margmiðlun, Skíma, Skrín and Snerpa competing.
In 2003 TAL, Íslandssími and Halló! merged under the name Og Vodafone, now called Vodafone Iceland since 6 October 2006. Today Vodafone is one of Siminn's main rival.
The Icelandic telecom market is very distinct and sharply separated from telecom markets of other countries. One of the main characters of the market is a high responsiveness towards innovation, but the Icelandic market has one of the highest penetration rates for both Internet and mobile phone.
Debt Maturity
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
32,000
2007 2008 2009 2010 2011 2012 2013 2014
ISKm
Long-term debt
SIMI 06 1
Further Information
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- SIMI 06 1
Recent News
On 23 August, Siminn announced it has bought all shares in the Danish company BusinessPhone A/S. With this transaction Siminn is acting on its strategy to support current and future Icelandic corporate customers as their partner in telecommunication and ICT services both in Iceland and northern Europe. The transaction will take effect on 1 September 2007.
Nýsir was established in 1991. It is an international group engaged in property investments and developments, PFI/PPP projects and related services. The group holds PFI/PPP contracts for many schools, sports centres and public buildings in Iceland and the UK. In Denmark the group is a commercial property investor.
The group offers in-house specialist services such as facilities management, mechanical and electrical design services, environmental and energy management services and construction management. The Nýsir group has specialised in the private delivery of education, health care, sports, leisure and cultural programmes. It has also participated in expansion projects, both as a consultant and an investor.
Nýsir's core business operates from offices located in Iceland, the UK and Denmark. It recently also opened office in Malta. Business opportunities are currently being pursued in other European countries and the Middle East.
Credit Summary
Nýsir has issued three listed bonds which all are linked to the Consumer Price Index (CPI) and are annual coupon bonds. As well they have listed one corporate bill. The first bond (NYSI 03 1) was issued 17 July 2003. It bears 8.5% interest rate and will mature 17 July 2008.
The second bond (NYSI 05 1) was issued 1 September 2005 and will mature 1 September 2010. The bond bears 5.5% interest rate.
The third bond (NYSI 06 1) was issued 8 February 2006. It bears 6.5% interest rate and its maturity date is 8 February 2011.
The corporate bill (NYSI 08 0319) was issued on 19 March 2007 and will mature one year later.
Further Information
§ OMX Nordic Exchange Iceland (www.omxgroup.com)
- NYSI 03 1
- NYSI 05 1
- NYSI 06 1
Debt Maturity
0
2,000
4,000
6,000
8,000
10,000
12,000
2007 2008 2009 2010 2011 2012
ISKm
NYSI 03 1 NYSI 05 1 NYSI 06 1
NYSI 08 0319 Long-term debt
Organisational Chart 2007
Recent News
On 13 September, there was a change in Nýsir's management. Höskuldur Ásgeirsson has been hired as a CEO and he will take over from Sigfús Jónsson who has been the CEO for the last 10 years. Sigfús will be in charge of Nýsir's expansion in the UK as well as be on the company's board.
On 2 August, Nýsir and Bifröst University signed an agreement on the refinancing of Bifröst University and on Nýsir's purchase of the university's housing. Nýsir will rent the housing to Bifröst University and the university has the right to buy it back every five years.
Nýsir
PFI & Property
Investments Investments Operations
Land and
Property
Developments
Nýsir – Real estate, renting and business activities www.nysir.is
Ticker Coupon Type Indexation Maturity Last tradedIndicative Yield
Indicative Spread Duration
Outstanding Nominal Value (ISKm)
IAIR 08 0131 0.0% Zero Coupon Bond Nominal 31/01/2008 N/A 16.34% 1.70% 0.31 6,240.00
Company Profile
Icelandair Group is a holding company with 10 independent subsidiaries, focused on the airline and tourism sectors. The companies comprising Icelandair Group are: Icelandair, Loftleidir Icelandic, Bluebird Cargo, Icelandair Cargo, Icelandair Shared Services, Icelandair Ground Services (IGS), IceLease, Icelandair Hotels, Air Iceland and Iceland Travel.
The largest subsidiary Icelandair, the international airline, is responsible for approximately 50% of the group's turnover.
In October 2005, fundamental changes took place in FL Group hf. (Icelandair's largest shareholder at the time) where investments became the main focus. In the process its acquisitions and corporations were divided into groups and Icelandair Group was one of them. Although Icelandair Group has a brief history, as it was only established at the end of 2005, the company has a background of 70 years through its predecessors, the airline companies Loftleidir, Flugfélag Íslands and Flugleiðir. Icelandair Group was listed on the OMX Nordic Exchange Iceland in December 2006 as ICEAIR.
Credit Summary
Icelandair Group has one outstanding bond which was issued 31 January 2007 (IAIR 08 0131). The bond is a non-indexed zero coupon bond. The bond will mature 31 January 2008.
Further Information
§ Kaupthing Research
§ OMX Nordic Exchange Iceland(www.omxgroup.com)
- IAIR 08 0131
Recent News
On 18 September 2007, Icelandair Group signed an agreement with a group of Czech private investors to buy the Czech airline Travel Service, the largest private airline in the Czech Republic. It will purchase 50% of the shares now and will buy at least additional 30% of the shares within one year.
12 September 2007, the chairman of the Board of Directors, Finnur Ingólfsson, decided to step down from the board and Gunnlaugur M. Sigmundsson was elected as a new chairman.
Eyrir Invest is an international investment company and was founded in July 2000. Its main emphasis is on investments in listed companies in Europe, especially in Scandinavia and the Baltic countries.
Eyrir Invest's mission is to increase shareholders' value by active ownership and trading of equities and other securities. Eyrir Invest places great emphasis on participating in operations and strategic planning of the business it invests in. It invests mainly i n industrial companies, banks and financial institutions and tries to invest in few companies at any given time.
About 75% of Eyrir Invest's holdings are shares in three listed companies: Marel (developer of food-processing systems) and Össur (producer of prosthetics and orthotics) in Iceland and Stork N.V. (industrial company) in Netherland.
Credit Summary
Eyrir Invest has one listed bond, EYRI 05 1. The bond was issued 9 May 2005 and will mature 2 May 2012. The bond bears 5.5% annual interest rate, paid annually.
It also has one unlisted bond, EYRI 07 2. The bond bears a liquid interest rate of 3M REIBOR + 2.20% and will mature 20 August 2009.
Further Information
§ OMX Nordic Exchange Iceland(www.omxgroup.com)
- EYRI 05 1
Portfolio by market value and liquidity in 2006
Small Cap3%
Mid Cap54%
Large Cap43%
Debt Maturity
0
2,000
4,000
6,000
8,000
10,000
12,000
2007 2008 2009 2010 2011 2012*
ISKm
EYRI 07 2
EYRI 05 1
Borrowings
Group Structure
Breakdown of Investments by Stock Exchanges in 2006
Oslo3% Amsterdam
14%
OMX Helsinki4%
OMX Stockholm
21%
OMX Iceland58%
Eyrir Invest
Marel (32.8%) Össur (21.8%) LME (40%) Other companies (5.4%)
Eyrir Invest – Investment Company www.eyririnvest.com
Ticker Coupon Type Indexation Maturity Last tradedIndicative Yield
Indicative Spread Duration
Outstanding Nominal Value (ISKm)
NORV 07 1219 0.0% Zero coupon bond Nominal 19/12/2007 N/A 15.86% 1.20% 0.19 1,710.00
Company Profile
Norvik Banka was established in 1992 and operates in the Latvian and international financial markets. In December 2006 the Bank obtained a new name, Norvik Banka (the previous name was Lateko Banka). It has approximately 90 offices around Latvia and its head office is in Riga. Norvik Banka also has Information Centres in Moscow and London and an office in Minsk in Belarus. At year-end 2006, the bank had around 635 employees and around 80,000 clients, mostly local private individuals.
Norvik Banka's target is to be among the first five major banks of Latvia, providing universal and qualitative banking services to individuals and corporate clients at affordable rates.
About 51% of the bank's equity is held by the Icelandic company Straumborg ehf. Norvik Banka has been in cooperation with Fitch Ratings since 2001 and started cooperation with Moody's Investor Service in February 2007.
Credit Summary
Norvik Banka has one outstanding discounted bill of exchange denominated in ISK (NORV 07 1219). It is non-indexed zero coupon bond and was issued 19.03.2007. It is with maturity of 9 months (19.12.2007).
Recent News
In June 2007, Norvik Banka increased its capital to LVL 30,499,928. Previously capital of the bank amounted to LVL 22,499,928.
On 6 June 2007, Norvik Banka signed a syndicated loan facility agreement for 28.5 million euros. The loan interest rate is EURIBOR +0.70%.
Credit Rating
Norvik Bank has a credit rating from Moody's and Fitch.
Moody's Fitch
Long-term Ba3/Stable B+/Positive
Liabilities and Capital Structure at 31 December 2006