Loan Agreement between Municipality Credit Iceland and the CEB to finance municipal infrastructure investments in Iceland

23 May 2008

PARIS - Municipality Credit Iceland (MCI) and the CEB today signed a loan agreement for an amount of € 30 million for the partial financing of investments carried out by Icelandic municipalities, municipal enterprises or institutions in the fields of education, protection of the environment and improving living conditions in urban and rural areas.

This is the second CEB loan to MCI and will allow CEB to continue to provide support to investments financed by Icelandic local authorities outside the capital Reykjavik. The first CEB loan of € 20 million concerned mainly projects in the field of education and environment, partially financing investments such as construction/renovation of kindergartens and primary schools, or the construction of geothermal heating distribution systems or sewage networks.

MCI is owned by the Icelandic municipalities. Its objective is to extend loans on favourable terms to Icelandic municipalities and municipal institutions or enterprises. By providing access to international capital markets to smaller local authorities, MCI’s intermediation contributes to reducing regional imbalances throughout the country.