Íbúðalánasjóður - Company Announcement

The Housing Financing Fund (HFF) is not at default risk

Press coverage and claims to the effect that  HFF is facing a default on its
issued debt has no supporting substance in the balance sheet, liquidity
position, or operations of the Fund. Due to press coverage on HFF on 17th
October 2012 it is important to keep the following in mind: 



HFF is not facing a failure to meet its issued debt obligations, and () thus,
it is important not to draw conclusions on the liquidity position and debt
serviceability based on the equity position of  HFF. 



Liquidity and debt serviceability

HFF is in a strong position to meet upcoming debt obligations (). The Fund has
about ISK 54 billion in liquid assets and for that reason, it has not tapped
the debt capital market since January 2012. 



HFF's equity position

  -- HFF needs about ISK 12-14 billion to get its equity ratio to the  minimum
     required by legislation.
  -- HFF awaits a  decision by  Icelandic authorities to strengthen the Fund‘s
     equity position. The timing of such a decision has no direct impact on the
     Fund´s ability to meet its debt obligations.
  -- The decision by  Icelandic authorities to strengthen the Fund´s equity is
     purely related to loan impairments, and has nothing to do with the
     liquidity position.
  -- The debt obligations of HFF have an implicit State guarantee.