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Iceland's insurers pulled cover.

 A leading credit insurer has pulled cover for suppliers to Iceland as the jump in energy costs piles

Iceland super market

pressure on the frozen-food chain ahead of a crunch refinancing.

Coface is said to have slashed cover on Iceland to zero in December. Fellow insurers Allianz Trade and Atradius both cut coverage levels in Iceland last year.

It is unusual for grocery retailers, which tend to churn out reliable cash flow, to be targeted by credit insurers. But Iceland’s reliance on large chest freezers means it is disproportionately exposed to the surge in energy prices.

After its energy bill jumped from £70 million to about £155 million this year, Iceland is understood to have entered into agreements with renewable-energy providers to lock in the price of 50 to 65 per cent of its energy requirements for the next 15 years. In November, The Sunday Telegraph reported that hedge funds had snapped up Iceland’s debt, potentially positioning themselves to seize control of the supermarket ahead of its £550 million bonds maturing in March 2025. At 89p in the pound, the bonds are trading well below their issue price, though they are at their highest level since April.

Iceland’s net debt of £717 million is about six times its expected underlying earnings.

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  1. Alexandra5 February 2023 at 12:14

    So Iceland will have the same price for energy for the next 15 years (for about 65% of its energy requirements)? That sounds like a very good deal for their people. I wonder if other, bigger countries could do this as well.

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