To be able to continue offering mortgage loans within the current LTV limits at marketdriven and transparent prices, Nykredit introduces two-tier mortgaging for commercial customers. Nykredit thus contributes to securing financial stability, offering the most attractive mortgage rates possible in a market characterised by financial risk. As from 30 March 2009, Nykredit introduces two-tier mortgaging for the financing of commercial properties. In future, all new loans secured on commercial properties will be a combination of SDO loans and traditional mortgage bond (RO) loans. The part of a loan which in a typical commercial property is secured by mortgage on 0 to 45% of the property value will be funded by SDOs, while the top part will be funded by ROs. The top part of the loan will only be offered as a repayment mortgage. Where the LTV limit is 80%, the SDO loan may amount to 60%. For further details on the implementation of two-tier mortgaging, see the Appendix below. In accordance with EU rules, Danish SDO legislation stipulates that mortgage banks must provide supplementary security to bond investors if the value of mortgaged properties decreases, and LTV ratios of the loans exceed the stipulated LTV limits. This requirement applies on a permanent basis to SDOs, but not to ROs. As a result of the SDO legislation, Nykredit therefore has to issue so-called junior covered bonds, using the proceeds to provide security for loans secured on properties that are subject to considerable price declines. This is an inexpedient and expensive solution - especially in relation to properties showing substantial price fluctuations. Two-tier mortgaging means that the overall yield-to-maturity of the combined bond issues will be slightly higher. But the uncertainty and costs of having to provide additional security if property prices fall will be eliminated, and the reduced cost will benefit customers, who will continue to have access to the most attractive mortgage rates possible. - By using ROs for a small part of customers' loans, we obtain a solution enabling Nykredit Commercial Customers to continue offering attractive financing. Customers obtain transparent and market-driven prices reflecting the extraordinary risk in financial markets. Also, the solution helps counteract increasing mortgage loan prices in the long run, says Karsten Knudsen, Group Managing Director. For further information, please contact Karsten Knudsen, Group Managing Director, tel +45 44 55 18 31, or Nels Petersen, Head of Corporate Communications, tel +45 44 55 14 70/+45 20 22 22 72. For details on the bonds, please contact Henrik Hjortshøj-Nielsen, Executive Vice President, tel +45 44 55 10 40.