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Ministry of Finance and Economic Affairs

Treasury repays Avens bond

Today the Treasury repaid the balance outstanding on the so-called Avens bond totalling EUR 192 million plus interest. The original face value of the bond, issued in 2010 and to be repaid in instalments with final maturity in 2025, was EUR 402 million.

The debt originated from the purchase by the Treasury of asset-backed bonds of Avens BV, a company owned by the former Landsbanki Íslands hf. In the summer of 2008 the bank had pledged bonds of Avens BV to obtain credit from the European Central Bank (ECB) in Luxembourg. The assets of Avens BV were primarily Icelandic bonds, making the company the largest individual owner of ISK assets outside of Iceland. Upon the collapse of the banking system in Iceland the ECB in Luxembourg acquired a claim on Avens and the underlying ISK assets. Following an agreement negotiated between the Central Bank of Iceland and the Treasury, on the one hand, and the insolvent estate of the former Landsbanki and the ECB, on the other, an accord was reached with 26 Icelandic pension funds on purchase of a major portion of the Avens ISK assets in return for payment in EUR. The assets concerned were bonds issued by the Treasury and the state-owned Housing Financing Fund (HFF).

The outstanding balance on the Avens bond equivalent to ISK 28.3 billion was paid from the Treasury's FX deposits with the Central Bank of Iceland. These have grown considerably this year in part due to repayments by Arion Bank of subordinated Treasury loans totalling some ISK 20 billion.

For further information contact Esther Finnbogadóttir tel. (+354) 545-9200.

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