Treasury Prepays ISK 50 billion of the Central Bank's bond – 10% overall reduction of debt in 2015

At year-end 2015 the Treasury made a payment of ISK 49.9 billion on a bond, issued to the Central Bank of Iceland. This represents one of the largest single repayments of Treasury debt to date. The instalment reduced the Treasury's cash balance with the Central Bank.

Originally issued in January 2009 to reinforce the Central Bank's equity position, the bond is to be repaid in annual instalments of ISK 5 billion. In 2015 the Treasury paid around ISK 47 billion in addition to the requisite annual instalment on the bond, leaving an outstanding balance of around ISK 90 billion at year-end. The intention is to pay off the debt in full during the current year. After taking into consideration the payment towards the Central Bank's bond, the Treasury's balance with the Central Bank at year-end 2015 was ISK 88.5 billion.

The Treasury also prepaid a major portion of its outstanding foreign loans during the past year, with total payments amounting to ISK 103 billion. In the first half of 2015 the Treasury bought back almost half of the outstanding stock of its 2011 USD issue, equivalent to around ISK 67 billion. In May a loan from Poland, provided to Iceland in connection with the economic recovery programme agreed by the Icelandic government and the IMF, was prepaid amounting to around ISK 7.5 billion. The Treasury also prepaid the so-called Avens bond in July, in the amount of ISK 28.3 billion.

As a result, during the past year the Treasury has prepaid around ISK 150 billion in domestic and foreign debt. Other things remaining equal, these prepayments will reduce the Treasury's interest expenses by around ISK 7 billion annually. At year-end 2015 total Treasury liabilities are estimated at around ISK 1,349 compared to ISK 1,492 at year-end 2014. This represents a 10% reduction YoY. The intention is to further reduce debt in 2016 to around ISK 1,171 billion by year-end.

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