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Íslandsbanki concludes market making agreement for covered bonds

Íslandsbanki hf. has signed market-making agreements with Arion bank hf., Kvika hf., and Landsbankinn regarding covered bonds issued by Íslandsbanki on NASDAQ Iceland.

Íslandsbanki hf. has signed market-making agreements with Arion bank hf., Kvika hf., and Landsbankinn regarding covered bonds issued by Íslandsbanki on NASDAQ Iceland.

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 place bid and ask orders for the bonds every day. The minimum nominal amount of orders in series other than benchmark series is ISK 20 million. The minimum nominal amount for benchmark series shall be based on the size of each series in accordance with the following table:

Benchmark series are ISLA CB 21, ISLA CB 23, ISLA CBI 26, ISLA CBI 28 and ISLA CBI 30. 

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.

The maximum bid-ask spread depends on the number of years to maturity at any given time in accordance with the table below.

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.

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 80m in other series.

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