Financial and Mortgage Portfolio Overview
Íslandsbanki's covered bond programme
Assets are ring-fenced on the issuer's balance sheet
Transaction Structure
Fiscal Agent
(Citibank)
Representing
Bondholders
Icelandic Financial
Supervisory Authority
Oversight by the
Mortgage
Covered
Bond
Cross Currency
Liability Swap Provider
Swap Agreement
(as applicable)
Monitoring Independent Inspector
Cover Pool
(KPMG)
Issuer
(Íslandsbanki)
Covered Bond
Investors
Proceeds from
Mortgage Covered
Bond
Key features
Íslandsbanki's covered bond programme reflects the Icelandic ring fencing on balance sheet structure: the
assets inlcuded in the cover pool are segregated from Íslandsbanki's remaining assets by way of registration in
a cover assets register, with no need to transfer the cover pool to a separate entity
The covered bondholders benefit from dual recourse to both Íslandsbanki on an unsecured basis and to the
cover pool of assets
The programme currently commits to an overcollateralisation (OC) of 25%, which will gradually decrease to 5%
by 2030 the Icelandic covered bond framework protects the OC for the benefit of the bondholders in the event
of issuer insolvency
The cover pool is bankruptcy remote and exclusively available to meet outstanding claims under the
covered bonds. It is composed exclusively of Icelandic residential mortgages. Substitute assets are
allowed up to a limit of 20%
The programme features a liquidity reserve covering 180 days of net outflows
On 1 June 2022, S&P assigned a 'A' rating to the programme
Hedging structure
Íslandsbanki established a collateral reserve account upon issuing its first EUR-denominated covered bond
Assets and/or cash are pledged to the collateral reserve account according to the amounts and thresholds in
S&P's rating methodology
Covered bondholders have full recourse on the collateral reserve account
The programme allows Íslandsbanki the flexibility to enter into swap agreements with external counterparties.
Such swap agreements shall provide hedging from currency risk arising from mismatches between the
mortgage loans included in the cover pool, denominated in ISK, and the amounts payable to the covered
bondholders
The amounts standing to the credit of the collateral reserve account may be used by Íslandsbanki to enter
into a cross currency liability swap
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August-September 2022View entire presentation