Press release from ÍL Fund and the Ministry of Finance and Economic Affairs

Core Viewpoint - The Icelandic Government is proposing a settlement plan for the Housing Financing Fund (HFF) bonds, which aims to facilitate the winding-up of the ÍL Fund and improve the Treasury's financial position [1][5]. Group 1: Settlement Proposals - The Icelandic Government plans to issue new Treasury bonds amounting to ISK 540 billion, which includes refinancing ISK 238 billion of the Treasury's debt to the ÍL Fund and settling the Treasury's guarantee of the ÍL Fund's obligations [2]. - The total value of the HFF bonds in the settlement is set at ISK 651 billion, with the Treasury receiving Treasury bonds valued at ISK 540 billion, other securities worth ISK 38 billion, and cash amounting to ISK 73 billion [3]. Group 2: Approval Process - The proposals will be presented at a creditors' meeting, requiring approval from creditors representing 75% of the total claims for the settlement to be binding [4]. Group 3: Financial Impact - The proposed actions are expected to generate positive cash flows to the Treasury in the coming years, with the Treasury Part A debt ratio projected to improve by at least 5% of GDP [5]. - The amount of debt backed by state guarantee will be reduced by 88% compared to year-end 2024 values, and the total stock of outstanding Treasury-guaranteed and issued securities in the market will decrease by approximately ISK 111 billion [5]. Group 4: Stakeholder Benefits - The settlement will fully resolve obligations to bondholders, primarily Icelandic pension funds, and eliminate uncertainties regarding the Government's guarantee of the ÍL Fund's obligations [6].