Think city officials are avoiding humiliation

Market participants familiar with the bond market say that the City of Reykjavík has wanted to avoid humiliation on the market by canceling a planned bond issue scheduled for today. The City announced after the close of the markets yesterday that the issue had been cancelled, for the second consecutive month.

Lack of confidence in the city's financial position

Those that the Business section of Morgunblaðið talked to agree that there was little interest on the part of market participants to participate in the city’s planned offer. Therefore, it is to be expected that their lack of interest in the issue would have been degrading for the city, as this implies a lack of confidence in the city’s financial position and ability to pay.

Have applied for ISK 21 billion loan

It has been reported that the City of Reykjavík aimed to apply for ISK 21 billion in loan capital in the first half of the year, either through a new bond issue, an expansion of existing bond classes, or other means that take into account market conditions.

The city has already applied for four billion ISK with a bond issue and has drawn three billion ISK (out of a possible six) on a line of credit with Íslandsbanki. The city has also accessed a similar line of credit with Landsbanki. Neither City Council chairman Einar Þorsteinsson nor Mayor Dagur B. Eggertsson could be reached for comment yesterday.