Lánamál ríkisins - Company Announcement

Treasury Issues EUR-denominated Bonds

The National Treasury has today concluded agreements on issuance of bonds
totalling EUR 750 million, or the equivalent of ISK 116 billion, the Treasury's
first public EUR issuance since 2006. 

The bonds bear fixed interest of 2.5% and have a 6-year maturity, with a yield
of 2.56%. Investors showed strong interest in the issue, with total
subscriptions around EUR 2 billion.  The broad-based investor group is
comprised primarily of institutional investors in Europe and the US. 

Citibank, Barclays, Deutsche Bank and JP Morgan were joint co-ordinators for
the issue. 

“This bond issue marks a turning point, and is a very positive step in the
reconstruction of the Icelandic economy.  The Treasury is demonstrating its
capacity to refinance debt on the European capital market, the market which is
most significant for sovereign funding.  In recent months terms available to
the Treasury on foreign markets have improved significantly, providing us with
an opportunity to reduce the Treasury's interest expense. We are availing
ourselves of the opportunity now when circumstances are favourable for
borrowing.  This issue paves the way for improved access for domestic parties
seeking foreign funding,” said Bjarni Benediktsson, Ministry of Finance and
Economic Affairs. 

Investor response was extremely positive and the issue was subscribed almost
three times over. “Market actors' interest in the bonds shows their confidence
in the Icelandic economy and the success which has been achieved in fiscal
policy,” Bjarni Benediktsson added. 

The funds obtained through the issue will be used to prepay outstanding
balances on bilateral loans provided to Iceland from Nordic countries in
connection with the economic recovery programme agreed by the Icelandic
government and IMF in 2008. “The fact that we can now obtain an interest rate
on the open market approximately 1 percentage point lower than was offered to
us to fund the recovery programme shows the greatly increased confidence in
Iceland," the Ministry of Finance and Economic Affairs concluded. 

The bond issue is in line with the state's debt management strategy, which
among other things aims at ensuring longer-term access to foreign credit
markets and to a broad investor base. 

Reykjavík, 8 July 2014



Disclaimer

This announcement does not constitute or form part of any offer or invitation
to sell, or any solicitation of any offer to purchase or subscribe nor shall it
(or any part of it) or the fact of its distribution, form the basis of, or be
relied on in connection with, any contract therefore. The offer and the
distribution of this announcement and other information in connection with the
listing and offer in certain jurisdictions may be restricted by law and persons
into whose possession any document or other information referred to herein
comes should inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a violation of the
securities laws of any such jurisdiction. 

This announcement is not an offer for sale of any securities in the United
States. Securities may not be offered or sold in the United States or to, or
for the account or benefit of, U.S. persons (as defined in Regulation S under
the U.S. Securities Act of 1933, as amended (the "Securities Act")) absent
registration or an exemption from registration under the Securities Act. The
Issuer has not registered and does not intend to register any portion of any
offering in the United States or to conduct a public offering of any securities
in the United States. 

This announcement is directed only at (i) persons who are outside the United
Kingdom or (ii) persons with professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (iii)
high net worth entities, and other persons to whom it may lawfully be
communicated, falling within Article 49(2) of the Order (all such persons
together being referred to as "relevant persons"). Any investment activity to
which this communication relates will only be available to and will only be
engaged with, relevant persons. Any person who is not a relevant person should
not act or rely on this document or any of its contents.

Attachments:

Pressrelese_issueEUR 080714.pdf