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A&O Shearman supports Arion Bank on EUR300 million European covered bond issuance

A&O Shearman supports Arion Bank on EUR300 million European covered bond issuance
Published Date
Feb 25 2026
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Image of Daniel Hill
Daniel HillPartner, London
Image of Graeme MacDonald
Graeme MacDonaldSenior Associate, London

A&O Shearman has advised Arion Bank hf., one of Iceland's leading commercial banks, on the issuance of a EUR300m European Covered Bond (Premium), marking the bank's first euro-denominated covered bond issuance since 2021.

The covered bonds have a five-year maturity, pay a coupon of 2.75%, and were priced at a spread of 40 basis points over mid-swaps. The transaction attracted strong investor demand, with books approximately 3.5 times oversubscribed, receiving orders from 45 investors across 13 countries throughout Europe. Final books stood at EUR1.1bn.

The covered bonds qualify as European Covered Bonds (Premium) under applicable European and Icelandic legislation and are rated Aa1 by Moody's. The issuance refinances Arion Bank's 2021-1 series covered bond [, with A&O Shearman also advising on the tender of those bonds]. The transaction represents a significant milestone in the bank's funding strategy.

“This transaction is a great success for Arion Bank as an issuer and demonstrates the continued resilience of the European covered bond market. The significant oversubscription and broad investor participation across 13 countries underscore the appetite for high-quality Icelandic credit.”

The A&O Shearman team was led by global financial markets partner Daniel Hill and senior associate Graeme MacDonald with assistance from associate John Hobbs.

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