Íbúðalánasjóður - Company Announcement

SIGNING OF AGREEMENTS HFF BOND ISSUANCE AND MARKET MAKING

On September 28th, the Housing Financing Fund (HFF) signed agreements regarding
HFF bond issuance and market making in the secondary market. 

The objective of the agreements is to enhance HFF´s access to funding and
strengthen price formation in the secondary market. 

As of October 1st, 2012, four financial institutions are authorized to refer to
themselves as  „Primary Dealers in HFF bonds”; Arion banki hf., Íslandsbanki
hf.,  MP Banki hf. and Landsbankinn hf. 

The following topics describe the content of the agreement:

  -- Primary Dealers have exclusive rights to submit bids at HFF auctions. 
  -- Primary Dealers have exclusive access to HFF´s Securities Lending
     Facilities.
  -- Primary Dealers are obligated to submit bids at each auction for ISK 750
     million at market value.
  -- A Primary Dealer is a market maker in the secondary market for all HFF
     bonds and submits a minimum bid at nominal value for each bond series at
     Nasdaq OMX in Iceland as follows:

  Class    Nominal Value
------------------------
HFF150224   80.000.000  
------------------------
HFF150434   70.000.000  
------------------------
HFF150644   65.000.000  
------------------------

  -- A Primary Dealer is obligated to keep the maximum spread between bid and
     ask quotes as specified in the agreements.
  -- A Primary Dealer is required to renew his/her offers within ten minutes
     after they have been accepted. If the Primary Dealer's total transaction in
     one series during that day equals ISK 500 million at nominal value, the
     Primary Dealer is entitled to diverge from the maximum spread requirement
     for that particular series for the remainder of that day.
  -- The agreement is valid from October 1st, 2012 to June 30th, 2013. Total
     compensation paid to all Primary Dealers is ISK 100 million during the term
     of the agreement for market making in the secondary market and receive a
     0,12% commission for accepted bids in HHF bond auctions.

A sample agreement is attached, providing comprehensive information on the
Primary dealer's rights and obligations.

Attachments:

ILS Primary Dealer agreement 2012-2013.pdf

ILS Rules on HFFs Services Primary dealers 2012-2013.pdf