SOURCE: Landsbanki Íslands hf

August 23, 2006 02:02 ET

Landsbanki launches USD 2,25 billion notes

REYKJAVÍK, ICELAND -- (MARKET WIRE) -- August 23, 2006 --

On Tuesday August 22nd Landsbanki Islands HF (A2/-/A) priced an in-augural Yankee 5-year Fixed Rate Senior benchmark of US$1.5 billion, and a 3-year Floating Rate Senior benchmark of US$750 million with Banc of America, Citigroup and Deutsche Bank as Joint Book Runners.

The issue was launched off its newly established 144A programme which was arranged by Citigroup.

Following the completion of the 144A programme, Landsbanki undertook an extensive roadshow in the US with the bookrunners to develop the US market as a long term source of funding for the bank, complementary to its existing funding base in Europe.

With this transaction, representing the largest Icelandic bank issue in the Capital Markets, Landsbanki wanted to demonstrate that it has access to the capital markets through 2 broadly distributed and successfully oversubscribed benchmarks with strong secondary market performances.

Following ongoing conversations with several large lead investors, Landsbanki launched a 5-year fixed rate senior benchmark and a 3-year floating rate senior benchmark. The order book grew very rapidly and ultimately reached over US$3.6 billion for the two tranches. The majority of the accounts that were visited on the roadshow participated in the transaction.

Due to the overwhelming demand the company increased the transactions from the planned US$1.0 billion to US$2.25 billion, comprising US$750 million of the 3-year tranche priced at swaps+ 70bps and US$1.5 billion of the 5-year tranche priced at Treasuries +135bps.

This transaction demonstrates Landsbanki's good access to the markets despite recent turmoil for Icelandic credits, and is a clear vote of confidence by fixed income investors in Landsbanki's long term strategy and credit. With the funding raised today and during the last month Landsbanki has prefunded 85% of it's long and medium term debt maturing during the year 2007 having already fully funded 2006.

By nearly finalizing its refinancing needs for 2007, Landsbanki has also addressed the concerns expressed by some market participants regarding the short term refinancing risk of the bank.

For further information contact:
Sigurjón Th. Árnason, CEO, Tel. +354 898 0177, Halldór J.
Kristjánsson, CEO, Tel. +354 820 6399, and Brynjólfur Helgason, MD of
International Banking Tel. +354 820 6340.

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