Arion Bank and Landsbankinn have entered into a market making agreement on covered bonds on Nasdaq OMX Iceland hf. issued by Arion Bank.
The purpose of the agreement is to stimulate trading with the bonds covered by the agreement in order to generate normal market prices and to foster effective and transparent price formation.
Landsbankinn 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 ARION CBI 21, ARION CBI 29 and ARION CB 22 are benchmark series. Other series are ARION CBI 19 and ARION CBI 34.
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% |
The maximum of amount of total trades which Landsbankinn is obliged to make in bond series under this agreement each day, on which Landsbankinn is obliged to make an offer under this agreement, is ISK 500 million at nominal value in total in all bond series.
Arion Bank will grant Landsbankinn access to securities loans. The maximum loan to Landsbankinn in each series of covered bonds shall be ISK 320 million at nominal value for benchmark series and ISK 80 million at nominal value for other series.
For further information please contact Haraldur Gudni Eidsson of Arion Bank´s communications division at haraldur.eidsson@arionbanki.is, or tel: +354 444 7108