Q2/2025

• In Q2, Treasury bonds will be offered for sale in the amount of 40-60 b.kr. market value.
• The bonds that could conceivably be offered are all Treasury issues, and issue size and market conditions will determine how much, if any, will be sold in each series.

GDM Q2 Prospect 2025.pdf

Today the Government Debt Management on behalf of the Treasury and primary dealers signed agreements regarding issuance and market making in Treasury securities. The objective of the agreements is to maintain the Treasury’s access to financing, to enhance price formation in the secondary market for Treasury securities and promote an active system of benchmark issues in Iceland.

As of 1 April 2025, five financial institutions have been appointed as “primary dealers in Treasury securities”. They are: Arion Banki hf., Fossar Investment Bank hf., Islandsbanki hf., Kvika banki hf. and Landsbankinn hf.

The following bullet points describe the main content of the primary dealer agreement:

• Primary dealers have exclusive access to regular auctions of Treasury securities.
• Primary dealers have exclusive access to special facilities such as repurchase agreements offered by the Government Debt Management on behalf of the Treasury.
• Primary dealers are obliged to submit bids at each auction for a minimum of 100 m.kr. nominal value.
• Primary dealers are Market Makers in the secondary market for government bond series. They are obliged to submit bid and ask offers on the stock exchange for at least 60 to 100 m.kr. nominal value in each benchmark series (as laid out in the agreements).
• Primary dealers are in their bid and ask quotes governed by maximum spreads as laid out in the agreements.
• Primary dealers are obliged to renew their offers within ten minutes after execution of transaction. The primary dealer is entitled to depart from the maximum spread requirement if certain conditions are fulfilled.
• The agreement is valid from 1 April 2025 to 31 March 2026.

Further information can be obtained from Björgvin Sighvatsson, head of the Government Debt Management at +354 569 9600.

The Government Debt Management has decided to cancel the auction of Treasury bonds that was scheduled for 21 March 2025 since the target amount for the quarter has already been reached.

The Minister of Finance and Economic Affairs tasks the Central Bank of Iceland’s Government Debt Management department with concluding primary dealer agreements on issuance of Treasury securities and market making in the secondary market.

Resident entities that have an operating licence in accordance with Article 4, Paragraph 1 of the Act on Financial Undertakings, no. 161/2002, that have the equipment needed to participate in Treasury securities auctions and can demonstrate a secure settlement of transactions through the Central Bank of Iceland, may request to be parties to the agreement.

Primary dealers have the exclusive right to submit bids at regular auctions where Treasury securities are offered. They also receive access to special facilities such as repurchase agreements for government bonds, in accordance with the relevant rules and the applicable terms and conditions.

Primary dealers act as market makers for government bonds and are obliged to submit bid and ask quotes for a certain minimum amount in each series of government bonds, in accordance with the bid-ask maximum spread specified in the agreement.

Further information can be found in the attached sample primary dealer agreement. Those parties wishing to become primary dealers in Treasury securities are requested to send digitally signed agreements to the Government Debt Management department at the Central Bank of Iceland before 16:00 hrs. Friday 21 March 2025.

Further information can be obtained from Björgvin Sighvatsson, Head of Government Debt Management, at tel +354 569 9600.

Sample of Agreement (pdf)