Bond Issue
Bond issuance by the Housing Financing Fund
The Housing Financing Fund issues and sells market securities in
order to finance its lending operations as well as to balance and secure
its finances and operations. Bond issuance has undergone changes as a
result of the changing situation of the Fund and its predecessor, the
Housing Authority, and of relevant legal amendments. Market securities
were first issued and sold under the Housing Authority in 1989, when the
Housing Bond system was first established. Shortly thereafter Housing
Authority Bonds were issued with the purpose of re-capitalizing older
liabilities by the Housing Authority. The securities were issued in this
form until the end of June 2004 when new issuance within these series
was terminated and replaced by the issuance and sale of HFF Bonds to
finance the Fund´s operations.
When the Housing Bond and Housing
Authority Bonds were issued initially, electronic ownership
registration of securities had not been introduced in Iceland and
therefore the bonds were only issued on paper as bond certificates. Both
the Housing Bonds and the Housing Authority Bonds were listed on the
public stock market, formerly Verðbréfaþing Íslands hf., currently on
OMX Nordic Exchange. The bonds are still listed on that market. In the
year 2001 two Housing Bond series were issued, Series 1, 2001 (IBH26
0316, ISIN code IS0000004927) and Series 2, 2001 (IBH41 0315, ISIN code
IS0000004935), in de-materialised (electronic) format, and registered by
the Icelandic Securities Depository. In the wake of the issuance of
these series it was decided to offer owners of certain previously issued
Housing Bond and Housing Authority Bond classes to register them
electronically to the Icelandic Securities Depository. The classes in
question were Housing Bond Series 2, 1996 (IBH21 0115, ISIN code
IS0000001063), Housing Bond Series 1, 1998 (IBH22 1215, ISIN code
IS0000001071), Housing Bond Series 2, 1998 (IBH37 1215, ISIN code
IS0000001097), Housing Authority Bond Series 1, 1996 (IBN20 0101, ISIN
code IS0000001154) and Housing Authority Bond Series 2, 1996 (IBN38
0101, ISIN code IS0000001162). At the end of 2003, these series were
then deposited to Clearstream, an international depository and
settlement service. As a result, foreign investors were able to purchase
the bonds since registration in such international depositories is a
prerequisite for foreign investors buying securities in Iceland.
On
July 1, 2004, HFF´s securities issuance underwent a transformation. The
issuance of two bond classes, i.e. Housing Bonds and Housing Authority
Bonds was terminated. From then on the Fund issued one class only, i.e.
HFF Bonds. Initially three series of HFF Bonds were issued, HFF150224
(ISIN code XS0195066146), HFF150434 (ISIN code XS0195066575) and
HFF150644 (ISIN code XS0195066658). In order to strengthen the market
position of these series, owners of de-materialised Housing Bond and
Housing Authority Bond classes were allowed to exchange their older
bonds for new HFF bonds. Owners responded well and around 80 - 84% of
The Housing Authority classes and 85 - 98% of The Housing Bonds classes
were replaced by HFF bonds, making the new classes immediately very
marketable. November 2004 saw the addition of a new HFF Bond series,
HFF150914 (ISIN code XS0205348427). All the HFF Bond series are
listed on the public stock market at the Iceland Stock Exchange and
deposited at Euroclear, an international depository and settlement
service center.
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