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Landsbankinn hf.: Landsbankinn concludes market-making agreements for covered bonds

Landsbankinn hf. has signed market-making agreements with Arion bank hf., Islandsbanki hf. and Kvika bank hf. regarding covered bonds issued by Landsbankinn. The covered bonds are listed on NASDAQ Iceland and the market makers’ obligations in accordance with the agreement will become effective on 4 October 2019.

Prior to market opening each business day, the market makers will place bid and ask orders for covered bonds issued by Landsbankinn. The minimum nominal amount of orders in benchmark series, and series previously defined as benchmark series, shall be based on the size of each series in accordance with the following:

Size of series (bn.ISK) Order size (m.ISK)
0 - 5 20
5 - 10 60
10 + 80

Benchmark series are LBANK CB 21, LBANK CB 23, LBANK CBI 24 and LBANK CBI 28. Series previously defined as benchmark series is LBANK CBI 22.

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 Landsbankinn.

The maximum spread between bid and ask orders is determined by time to maturity on a given day, in accordance with the following table:

Time to maturity Maximum spread
0 - 6 months Unspecified
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 longer 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.

In conjunction with the market-making agreements, Landsbankinn 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.