Kuntarahoitus Oyj - Company Announcement

Municipality Finance strengthens its capital base by issuing a MEUR 350 capital loan - The company complies with bank regulatory requirements well in advance

Municipality Finance Plc
Stock Exchange Release
September 24, 2015 at 5:30 pm (CET +1)

Municipality Finance strengthens its capital base by issuing a MEUR 350 capital
loan - The company complies with bank regulatory requirements well in advance

Municipality Finance Plc has further strengthened its capital base by issuing in
the domestic and international markets a capital loan amounting to EUR 350
million. The instrument is an Additional Tier 1 capital loan, included in the
Additional Tier 1 capital.

The capital loan is perpetual, and Municipality Finance has the first option to
call the loan in 6.5 years after the issue date, in 2022. The coupon rate is
4.5 per cent, which is the lowest interest rate to date in the marketplace for a
public AT1 capital loan.

Historical transaction

Municipality Finance is globally the first SSA issuer of a publicly listed AT1
capital loan. In Finland the AT1 transaction itself is first of its kind.

Standard & Poor's has given the instrument a BBB+ rating, which is the highest
rating ever for an AT1 instrument.

Municipality Finance's issuance received great interest both from Finnish and
international investors. The transaction was nearly three times oversubscribed.
Domestic and Nordic investors were especially active in the transaction.

Customers benefit from the secured competitiveness

Municipality Finance has for years prepared itself for the capital demands based
on increasing banking regulation by improving its profitability. The company
intends to continue this strategy also in the future.

Municipality Finance's capital adequacy is already on an excellent level, but
its leverage ratio was 1.9 per cent at the end of June. The leverage ratio
requirements based on Basel III regulation will come into force in 2018, and
Municipality Finance is prepared for an expected 3 percent leverage ratio
requirement. With the issue of an AT1 capital loan, Municipality Finance's
leverage ratio now fulfils this requirement. Municipality Finance clearly
complies with all other capital adequacy requirements.

- With the help of this transaction Municipality Finance secures the
prerequisites of its operations, its competitiveness and efficient funding in
all conditions despite the tightening bank regulation. All this will serve to
benefit our customers, says the President and CEO Pekka Averio.

The AT1 capital loan was listed on the Irish Stock Exchange in Dublin.
Municipality Finance mandated Barclays, BNP Paribas, Goldman Sachs International
and Nordea Markets as joint lead managers of the transaction.

MUNICIPALITY FINANCE PLC

Further information:
Pekka Averio, President and CEO
Tel. +358 500 406 856
Esa Kallio, Executive Vice President, Deputy to the CEO, Capital Markets
Tel. +358 50 3377 953
Marjo Tomminen, CFO, Senior Vice President, Finance
Tel. +358 50 3861 764

Measured by the group's balance sheet, MuniFin (Municipality Finance Plc) is
Finland's third largest credit institution. The company is owned by Finnish
municipalities, the public sector pension fund Keva and the Republic of Finland.
MuniFin is an integral part of the Finnish public economy.

MuniFin's balance sheet totals nearly EUR 34 billion. Funding for the company is
primarily obtained through the international capital markets. MuniFin's funding
is guaranteed by the Municipal Guarantee Board.

MuniFin's mission is to ensure competitive funding for its customers in all
market conditions. The company's customers are Finnish municipalities, municipal
federations, municipally controlled companies and non-profit housing
cor­porations. A significant portion of lending is used for socially responsible
projects such as building hospitals, healthcare centers, schools, day care
centers and homes for the elderly.

The Municipality Finance Group also includes the subsidiary company, Financial
Advisory Services Inspira Ltd.

Read more: www.munifin.fi






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