Íslandsbanki hf. has signed market-making agreements with Arion bank hf. Kvika hf. and Landsbankinn regarding covered bonds issued by Íslandsbanki. The covered bonds are listed on NASDAQ Iceland and the market makers' obligations in accordance with the agreement will become effective on 16 October 2018.
The purpose of the agreement is to promote trading with the bonds covered by the agreement in order to increase their liquidity and encourage transparent price formation.
The market makers will submit bids and asks for the bonds every day. The minimum amount at nominal value for benchmark series shall be ISK 80 million and the minimum amount for other series shall be ISK 20 million. In the case of benchmark series, if the outstanding nominal value is less than ISK 10 billion, the total amount shall be ISK 60 million. If the series is more than ISK 10 billion, the total amount shall be ISK 80 million. The bond series ISLA CB 23, ISLA CBI 26 and ISLA CBI 30 are benchmark series.
The maximum bid-ask spread depends on the number of years to maturity at any given time, cf. table below.
| Years to maturity | Maximum spread | |||
| 0 - 6 months | No maximum | |||
| 6 months - 2 years | 0.20% | |||
| 2 - 4 years | 0.30% | |||
| 4 -6 years | 0.35% | |||
| 6 - 9 years | 0.60% | |||
| 9 -12 years | 0.70% | |||
| 12 - 18 years | 1.00% | |||
| 18 years or more | 1.15% |
Inflation-linked series that are prohibited from further issuance, according to the Central Bank of Iceland's rule no. 492/2001 on indexation of savings and loans, as subsequently amended, are exempt from the aforementioned obligations on maximum spread.
Individual market makers are released from their obligations on a particular trading day once the trading volume (specified as "AUTO") of that particular market maker totals ISK 500m for all series of covered bonds issued by Íslandsbanki.
In conjunction with the market-making agreements, Íslandsbanki will provide the market makers with bond lending facilities under which each market maker can borrow up to 320m in each benchmark series, and series previously defined as benchmark series, and 80m in other series.
For further information:
- Investor Relations - Gunnar S. Magnússon, ir@islandsbanki.is and tel: +354 440 4665.
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About Íslandsbanki
A leader in financial services in Iceland, Íslandsbanki is a universal bank with total assets of ISK 1,036bn and a 25% - 50% market share across all domestic business segments. Building on over 140 years of servicing key industries, Íslandsbanki has developed specific expertise in tourism, seafood and energy related industries. Driven by the vision to be #1 for service, Íslandsbanki’s relationship banking business model is propelled by three business divisions that manage and build relationships with the Bank´s customers. Íslandsbanki has developed a wide range of online services such as the Íslandsbanki, Kreditkort and Kass apps, enabling customers to do their banking whenever and wherever. At the same time, the Bank continues to operate the most efficient branch network in Iceland through its strategically located 14 branches. For the fifth consecutive year, Íslandsbanki led the Icelandic Customer Satisfactory Index for banks in 2017 and was also named Bank of the Year in Iceland by the Banker. Íslandsbanki has a BBB+/A-2 rating from S&P Global Ratings and BBB/F3 from Fitch Ratings and is the only bank in Iceland rated by two international rating agencies. www.islandsbanki.is
Disclaimer
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