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Treasury Issues EUR-denominated Bonds

July 8, 2014

The National Treasury has today concluded agreements on issuance of bonds totalling EUR 750 million, or the equivalent of ISK 116 billion, the Treasury's first public EUR issuance since 2006. The bonds bear fixed interest of 2.5% and have a 6-year maturity, with a yield of 2.56%. Investors showed strong interest in the issue, with total subscriptions around EUR 2 billion. The broad-based investor group is comprised primarily of institutional investors in Europe and the US. Citibank, Barclays, Deutsche Bank and JP Morgan were joint co-ordinators for the issue. “This bond issue marks a turning point, and is a very positive step in the reconstruction of the Icelandic economy. The Treasury is demonstrating its capacity to refinance debt on the European capital market, the market which is most significant for sovereign funding. In recent months terms available to the Treasury on foreign markets have improved significantly, providing us with an opportunity to reduce the Treasury's interest expense. We are availing ourselves of the opportunity now when circumstances are favourable for borrowing. This issue paves the way for improved access for domestic parties seeking foreign funding,” said Bjarni Benediktsson, Ministry of Finance and Economic Affairs. Investor response was extremely positive and the issue was subscribed almost three times over. “Market actors' interest in the bonds shows their confidence in the Icelandic economy and the success which has been achieved in fiscal policy,” Bjarni Benediktsson added. The funds obtained through the issue will be used to prepay outstanding balances on bilateral loans provided to Iceland from Nordic countries in connection with the economic recovery programme agreed by the Icelandic government and IMF in 2008. “The fact that we can now obtain an interest rate on the open market approximately 1 percentage point lower than was offered to us to fund the recovery programme shows the greatly increased confidence in Iceland," the Ministry of Finance and Economic Affairs concluded. The bond issue is in line with the state's debt management strategy, which among other things aims at ensuring longer-term access to foreign credit markets and to a broad investor base. ReykjavÍk, 8 July 2014 Disclaimer This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefore. The offer and the distribution of this announcement and other information in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement is not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")) absent registration or an exemption from registration under the Securities Act. The Issuer has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States. This announcement is directed only at (i) persons who are outside the United Kingdom or (ii) persons with professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Copyright © 2014 OMX AB (publ).

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Source: OMX

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