Iceland's finance minister said on Thursday the country's economic prospects had brightened and the island nation was in a good position to consider its first international sale of bonds since the recent financial collapse.
Iceland shelved plans to issue bonds earlier this year due to uncertainties over a dispute with Britain and the Netherlands over more than $5 billion in "Icesave" debt incurred during the island's worst-ever financial crisis.
The government now expects most of that debt to be covered by the estate of Landsbanki, the failed bank which ran the Icesave accounts, while aid from the International Monetary Fund and its Nordic neighbours looks set to flow uninterrupted in the months ahead.
Iceland also got a boost of confidence this week when ratings agency Fitch upgraded its outlook for the country to stable from negative while Standard & Poor's took the state off its negative credit watch.
Steingrimur Sigfusson told Reuters Iceland is eyeing a 2011 bond issue, but would not be more specific about the timing of the country's first sale in five years.
"We are in a position to review the situation now that the ratings are in place and things are moving forward," he said in a telephone interview. "It's in our plans to reach out to the market this year."
He would not be drawn on the size of such a bond but said the government was using maturing debt for 2011 and 2012 as a point of reference. After repaying investors early on some 346 million euros in maturing bonds, Iceland has around 454 million euros in outstanding bonds due for redemption this year and next.
Sigfusson said the state's reserves were strong enough to cover payments in the coming years. "This is not because we are in any immediate need for this funding. We are fully funded and can cover all of our payments well into the next two, three or four years," he said.
The sale would mark another step in the normalisation of affairs for a country whose financial system collapsed when its main commercial banks all went under in the space of a week in 2008.
Iceland was forced to seek an IMF-led aid package as the global credit crisis struck, triggering a deep recession. Funds from the aid programme, which ends this year, have been used to bolster currency reserves depleted during the crisis and Iceland's economy is expected to expand this year, though the recovery remains fragile. Fitch still has Iceland's rating at "junk" level - a bone of contention for Sigfusson.
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