Core Viewpoint - The Republic of Iceland successfully issued a EUR750 million benchmark bond due on 27th May 2030, demonstrating strong investor demand and achieving a minimal new issue concession [5]. Group 1: Transaction Details - The bond was priced at a coupon rate of 2.625% with a re-offer yield of 2.672% [5]. - The spread to mid-swaps was set at m/s+42bps, which is equivalent to a spread of 52.3bps against the OBL 2.400% Apr-30 benchmark [5]. - The transaction attracted over EUR4.3 billion in orders, marking the largest conventional orderbook on record for the Republic of Iceland [5]. Group 2: Pricing and Execution - The mandate for the new 5-year Euro-denominated benchmark was announced on 19th May 2025, with investor calls conducted throughout the day [5]. - Initial guidance was released at m/s+50bps, which was revised tighter to m/s+45bps due to strong demand [5]. - The final size of the bond was confirmed at EUR750 million after the orderbook surpassed EUR3.6 billion [5]. Group 3: Distribution - The allocation of the bond was diversified across various regions, with 25% going to Germany/Austria/Switzerland, 21% to Nordics, 16% to the UK, and smaller portions to Southern EU, Benelux, France, and others [5]. - By investor type, Fund Managers received the largest share at 53%, followed by Central Banks/Official Institutions and Banks at 17% each, and Insurance/Pensions at 12% [5].

Investment Rating - The report does not explicitly provide an investment rating for the industry analyzed Core Insights - The report introduces a novel framework called "Debt-at-Risk" to analyze risks surrounding public debt, indicating that global public debt could be approximately 20 percentage points higher than currently projected in severely adverse scenarios [6][12][26] - The framework employs a quantile panel regression to assess how macro-financial and political conditions impact future debt outcomes, highlighting pronounced variations in risks, especially in the upper tail of the distribution [6][12][16] - The analysis indicates that debt-at-risk is a key variable for predicting fiscal crises, outperforming other economic variables as a leading indicator [29][35] Summary by Sections Introduction - Global public debt exceeded $100 trillion in 2024 and is projected to approach 100% of global GDP by 2030, driven by major economies like China and the United States [15] - Rising trade tensions, tighter financial conditions, and spending pressures could exacerbate fiscal deficits and complicate the debt outlook [15][16] Methodology - The "debt-at-risk" framework builds on the "growth-at-risk" methodology and examines the dynamics of global debt distribution over a projection horizon of one to five years [17][18] - The empirical approach uses a location-scale model to estimate the predictive distribution of debt-to-GDP ratios, incorporating various financial, political, and economic variables [18][20] Results - Global debt-at-risk for 2027 is estimated at 117% of GDP, about 20 percentage points higher than previous projections [26] - For advanced economies, the three-year-ahead debt-at-risk in 2024 is estimated at about 131% of GDP, while for emerging markets, it is about 96% of GDP [27] - The report finds that adverse financial developments, such as tighter financial conditions and higher sovereign spreads, disproportionately affect the right tail of the future debt distribution [22][24] Extensions - The report evaluates the usefulness of debt-at-risk in predicting fiscal crises, finding it to be a robust predictor [29] - It expands the sample to include approximately 175 economies, quantifying upside risks to the debt outlook for nearly every economy [30] - The analysis identifies cross-country heterogeneity in debt-at-risk, influenced by initial debt levels and income status [31]