Financial and Mortgage Portfolio Overview
Íslandsbanki's covered bond programme - cont'd
Monitoring Representation of Bondholders / Oversight
The Independent Inspector is appointed by the issuer and approved by the Icelandic
Financial Supervisory Authority, or Fjármálaeftirlitið (FME) to monitor the cover pool
and the cover asset register. It also ensures compliance with matching and market
risk limits in accordance with the Icelandic covered bond legislation. The
Independent Inspector must submit a report of its inspection to the FME every six
months and must notify the FME as soon as they learn about any event deemed to
be significant to the supervisory authority
The Fiscal Agent acts as a point of contact between the issuer and the covered
bondholders. Any notices to be given to or by covered bondholders, for example,
need to be submitted through the Fiscal Agent
The FME oversees both covered bond issuer and application of the legal framework
Issuer bankruptcy does not entitle covered bondholders to
accelerate the programme
The programme does not feature issuer events of default, the occurrence of which
would entitle covered bondholders to accelerate the covered bonds
Pursuant to the Icelandic covered bond law, if an issuer enters into resolution
proceedings issued covered bonds cannot be accelerated
Following an issuer insolvency, any payments by borrowers of the mortgages
included in the cover pool will also be added to the register and used to make
payments under the covered bonds
Soft bullet maturity extension mechanism
Upon failure of the issuer to pay the Final Redemption Amount of a series of covered
bonds on their scheduled maturity date, payment of principal is automatically
deferred to the Extended Final Maturity Date, provided that such an extension is
contemplated in the final terms
Such non payment does not result in the acceleration of the covered bonds
The issuer can make a partial payment of the relevant Final Redemption Amount on
any interest payment date following the maturity extension and up to the Extended
Final Maturity Date
Interest will continue to be payable on any unpaid amount on each interest payment
date falling after the maturity date up to the Extended Final Maturity Date
On the Extended Maturity Date, failure to pay the Final Redemption Amount will
constitute a default
Account bank
If the issuer ceases to be an Eligible Institution (i.e. it is downgraded below BBB-),
it shall establish one or more of the following bank accounts in its name with an
Eligible Institution: transaction account, liquidity reserve account and collateral
reserve accounts denominated in ISK and any other currency for which there are
covered bonds outstanding at the time
The cash flows originated under the mortgage loans through borrower payments
I will be transferred to the transaction account
In the event that any Eligible Institution ceases to be qualified as such, the issuer
will be obliged to transfer the relevant issuer account to a credit institution with the
appropriate minimum ratings
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August-September 2022View entire presentation