Arion Bank has entered into market making agreements with Íslandsbanki, Kvika and Landsbankinn on covered bonds issued by Arion Bank on Nasdaq Iceland hf.

The purpose of the agreements is to stimulate trading with the bonds covered by the agreements in order to generate normal market prices and to foster effective and transparent price formation.

The market makers 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. However, market makers are not obliged to submit bids and asks for new bond series until the series has reached ISK 3 billion and the minimum bid /ask size shall be ISK 20 million until the series has reached ISK 5 billion, when the minimum shall increase to ISK 60 million until the series has reached ISK 10 billion and then the minimum shall be ISK 80 million. The bond series ARION CBI 21, ARION CBI 25, ARION CBI 26, ARION CBI 29, ARION CBI 48, ARION CB 19, ARION CB 22 and ARION CB 24 are benchmark series.

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

Years to maturityMaximum spread
0-6 monthsNo maximum
6 months - 2 years0.20%
2-4 years0.30%
4-6 years0.35%
6-9 years0.60%
9-12 years0.70%
12-18 years1.00%
18 years or more1.15%

An exemption is made from the maximum bid-ask spread requirement in the table above for inflation-linked series with less than 5 years to final maturity. The Bond series ARION CBI 21 are exempted in accordance with the above. Market makers are nonetheless required to submit bids and asks for these series, but the maximum bid-ask spread requirement is not applicable.

Arion Bank pays the market makers commission and will provide them with bond lending facilities. The maximum loan 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 Arion Bank’s Investor Relations at ir@arionbanki.is or Theodór Fridbertsson, investor relations, +354 444 6760.