An Icelandic bank created from the ashes of the failed Kaupthing group has become the country’s first lender to issue an international bond since 2007, underlining the rehabilitation of the Nordic island’s financial system.

Arion Bank issued NKr500 million (€66.8m) in bonds placed with some 60 investors from the Nordic region, the UK, continental Europe and Asia.

“This is an important moment for us and is the first step towards opening up the international markets,” said Höskuldur Ólafsson, chief executive.

“I think it is safe to say that it represents an important milestone in the regeneration of the Icelandic economy.

“But we must remember that it is only one of many stages in the process of making the international capital markets accessible for Icelandic companies,” said Mr Ólafsson.

He said that Iceland’s victory in the Icesave case against the UK and the Netherlands had helped sentiment. – The Financial Times Limited