Íslandsbanki and Arion banki enter market making agreement on covered bonds
Íslandsbanki and Arion banki have entered into a market making agreement on covered bonds issued by Íslandsbanki on Nasdaq Iceland.
The purpose of the agreement is to promote trading with the bonds covered by the agreement in order to increase their liquidity and encourage transparent price formation.
Arion banki will submit bids and asks for the bonds every day. 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. For other series the minimum amount shall be ISK 20 million. The bond series ISLA CB 19, ISLA CB 23, ISLA CBI 22 and ISLA CBI 26 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 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 amount of total trades which Arion banki is obliged to make in bond series under this agreement each day and during the time of validity of the agreement is ISK 500 million at nominal value in total in all bond series.
Íslandsbanki will grant Arion banka access to securities loans. The maximum loan to Arion banki 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.