Obligation Komunalbanken 3.26% ( NO0010794373 ) en NOK

Komunalbanken

100 % ⇌

Norvege

NO0010794373 ( en NOK )

3.26% par an ( paiement annuel )

Perpétuelle

Prospectus brochure de l'obligation Kommunalbanken NO0010794373 en NOK 3.26%, échéance Perpétuelle

1 000 000 NOK

1 200 000 000 NOK

21/06/2026 ( Dans 350 jours )

Kommunalbanken est une banque publique norvégienne qui fournit des services financiers aux municipalités et aux autres entités publiques norvégiennes.

L'Obligation émise par Komunalbanken ( Norvege ) , en NOK, avec le code ISIN NO0010794373, paye un coupon de 3.26% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le Perpétuelle

Securities Note

Fixed to Floating Rate Kommunalbanken AS Perpetual
Additional
Tier 1 Bond Issue 2017 with Issuer's Call Option

ISIN NO 0010794373

Arrangers:

5 July 2017

Important information

This securities note (the "Securities Note"), dated 5 July 2017, has been prepared by Kommunalbanken AS (the
"Issuer" or "Kommunalbanken") in connection with the listing of bonds issued under the Issuer's bond loan
Fixed to Floating Rate Kommunalbanken AS Perpetual Additional Tier 1 Bond Issue 2017 with Issuer's Call
Option with ISIN NO 0010794373 (the "Bonds") on the Oslo Stock Exchange. Please see Section 4 "Definitions"
for the definition of certain terms used throughout this Securities Note.
This Securities Note and the Issuers registration document dated 15 December 2016 (the "Registration
Document"), Supplement number 1 to the Registration Document dated 5 July 2017 (the "Prospectus") has
been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the "Securities
Trading Act") and related secondary legislation, including the Commission Regulation (EC) no. 809/2004
implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003
regarding information contained in prospectuses, as amended, and as implemented in Norway (the "EU
Prospectus Directive"). This Securities Note has been prepared solely in the English language. The Financial
Supervisory Authority of Norway (Nw: Finanstilsynet) (the "FSA") has reviewed and, on 5 July 2017, approved
this Securities Note in accordance with Sections 77 and 78 of the Norwegian Securities Trading Act. The FSA
has not controlled or approved the accuracy or completeness of the information included in this Securities
Note. The approval by the FSA only relates to the information included in accordance with predefined
disclosure requirements. The FSA has not made any form of control or approval relating to corporate matters
described in or referred to in this Securities Note.
Prospective investors are expressly advised that an investment in securities issued by the Issuer entails
financial and legal risks and that they should therefore read the Prospectus in its entirety when considering
an investment in the Bonds. The contents of the Prospectus are not to be construed as legal, financial or tax
advice. Each prospective investor should consult his, her or its own legal adviser, independent financial
adviser or tax adviser for legal, financial or tax advice.
The information contained herein is current as of the date hereof and subject to change, completion and
amendment without notice. Neither the delivery of the Prospectus nor the listing of the Bonds at any time
after the date hereof shall, under any circumstances, create an implication that the information contained
herein is complete or correct as of any time subsequent to the date hereof or that the affairs of the Issuer have
not since changed. In accordance with Section 715 of the Norwegian Securities Trading Act, every significant
new factor, material mistake, or inaccuracy relating to the information included in the Prospectus, which is
capable of affecting the assessment of the Bonds between the date of the Prospectus and the time of the
listing of the Bonds on Oslo Børs (the Oslo Stock Exchange), will be included in a supplement to the Prospectus.
Neither the Registration Document, Supplement number 1 to the Registration Document, the Securities Note
nor the Prospectus as a whole constitute an offer for sale or a solicitation of an offer to purchase the Bonds in
any jurisdiction. This Securities Note has been prepared solely for the purpose of listing the Bonds on the Oslo
Stock Exchange. This Securities Note may not be distributed in or into any country where such distribution or
disposal would require any additional prospectus, registration or additional measures or contrary to the rules
and regulations of such jurisdiction. Persons into whose possession this Securities Note comes are therefore
required to inform themselves about, and to observe, such restrictions. The Bonds have not been and will not
be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered
or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
Except for approval by the FSA, no other measures have been taken to obtain authorisation to distribute this
Securities Note or the Prospectus in any jurisdiction where such action is required.

2

Unless otherwise stated, this Securities Note and the Prospectus is subject to Norwegian law. In the event of
any dispute regarding the Securities Note, Norwegian law will apply.
3

TABLE OF CONTENTS:
1.
RISK FACTORS ................................................................................................................................... 5
2.
STATEMENT OF RESPONSIBILITY ................................................................................................. 8
3.
DETAILED INFORMATION ABOUT THE SECURITIES ................................................................ 9
4.
DEFINITIONS .................................................................................................................................... 16
5.
ADDITIONAL INFORMATION ........................................................................................................ 17
6.
APPENDIX BOND AGREEMENT .................................................................................................... 18

4

1. RISK FACTORS
An investment in the Bonds involves risks. Prospective investors should carefully consider the risk factors set
forth below and all information contained in the Prospectus, including the financial statements and related
notes. If any of the following risks were to materialise, individually or together with other circumstances, they
could have a material and adverse effect on the Issuer and/or its business, financial condition, results of
operations, cash flows and/or prospects, which could cause a decline in the value and trading price of the
Bonds, resulting in the loss of all or part of an investment in the Bonds. An investment in the Bonds is suitable
only for investors who understand the risks associated with this type of investment and who can afford to lose
all or part of their investment.
The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude
of their potential impact on the Issuer's business, financial condition, results of operations, cash flows and/or
prospects. The risks mentioned herein could materialise individually or cumulatively. Furthermore, risks that the
Issuer currently deems as not material could in the future prove to become material to the Issuer.
Below is included a description of certain risk factors that are material to the Bonds in order to assess the
market risk associated with these securities
1.1
THERE MAY BE NO ACTIVE TRADING MARKET FOR THE BONDS
The Issuer will apply for the Bonds to be listed on the Oslo Stock Exchange. The Bonds are, however, currently
held by few investors and consequently there is no trading market. The liquidity of any market for the Bonds
and the ability to sell the Bonds will depend on the number of holders of those Bonds, the interest of securities
dealers in making a market in those securities and other factors. Further, if such a market were to exist, there
is a risk that the Bonds will trade at prices that may be lower than the principal amount or purchase price,
depending on many factors, including prevailing interest rates, the market for similar bonds and the Issuer's
financial performance and solidity. If an active market does not develop or is not maintained, there is a risk
that the price and liquidity of the Bonds is adversely affected.
1.2
THE BONDS MAY BE REDEEMED PRIOR TO MATURITY
The Issuer has a call option to redeem the Bonds at certain terms and on certain dates as set out in the
agreement for the Bonds section 4.5.3. The redemption price payable upon the Issuer's exercise of such right is
100% of par value. The Issuer may choose to redeem the Bonds at times when prevailing interest rates may be
relatively low. In such circumstances an investor may not be able to reinvest the redemption proceeds in a
comparable security at an effective interest rate as high as that of the Bonds.
1.3
INTEREST RATE RISK
The Bonds are fixed rate securities to, but not included, the Payment Date in June 2027. The coupon (fixed
rate) does not vary with changes in interest rate levels. Investment in bond loans bearing interest at a fixed
rate involves the risk that subsequent changes in market interest rates may adversely affect the value of the
Bonds.
From and included the Payment Date in June 2027, Interestrate risk is the risk that results from the variability
of the Nibor interest rate. The coupon payments, which depend on the Nibor interest rate and the Margin, will
vary in accordance with the variability of the Nibor interest rate. The interestrate risk related to this Bond
Issue will be limited, since the coupon rate will be adjusted quarterly in accordance with the change in the
reference interest rate (Nibor three months) over the perpetual tenor. The primary price risk for a floating rate
bond issue will be related to the market view of the correct trading level for the credit spread related to the
bond issue at a certain time during the tenor, compared with the credit margin the bond issue is carrying. A
possible increase in the credit spread trading level relative to the coupondefined credit margin may relate to
general changes in the market conditions and/or Issuerspecific circumstances. Under normal market
circumstances, however, the anticipated tradable credit spread will fall as the duration of the bond issue
shortens. In general, the price of bonds will fall when the credit spread in the market increases, and conversely
the bond price will increase when the market spread decreases.

5

1.4
CREDIT OR CORPORATE RATINGS MAY NOT REFLECT ALL RISKS
As of the date of this Registration Document, Moody's and Standard & Poor's have assigned Aaa and AAA to
the longterm senior debt of the Issuer, respectively. The Bonds have received A+ rating from Standard &
Poor's.
Furthermore, one or more independent rating agencies may also assign ratings to the Bonds, which may not
necessarily be the same as the rating(s) described above or the rating(s) assigned to other securities issued by
the Issuer. The ratings may not reflect the potential impact of all risks related to structure, market, additional
factors discussed in this section, and other factors that may affect the value of the securities issued by the
Issuer. A credit rating and/or a corporate rating is not a recommendation to buy, sell or hold securities and
may be revised or withdrawn by the rating agency at any time. Any adverse change in an applicable credit
rating could adversely affect the trading price of, and market for, the Bonds.
1.5
RISKS RELATED TO THE STRUCTURE OF THE BONDS
The obligations of the Issuer in respect of the Bonds are unsecured and deeply subordinated and investors
assume an increased risk of loss in the event of the Issuer's insolvency.
The Bonds constitute unsecured and subordinated obligations of the Issuer.
On a liquidation, dissolution or other windingup of the Issuer by way of public administration (except, in any
such case, a solvent liquidation, dissolution, or windingup solely for the purposes of a reorganisation,
reconstruction or amalgamation of the Issuer), all claims in respect of the Bonds will rank junior to the claims
of all Senior Creditors of the Issuer. If, on a windingup of the Issuer, the assets of the Issuer are insufficient to
enable the Issuer to repay the claims of more seniorranking creditors in full, the holders will lose their entire
investment in the Notes. If there are sufficient assets to enable the Issuer to pay the claims of seniorranking
creditors in full but insufficient assets to enable it to pay claims in respect of its obligations in respect of the
Bonds and all other claims that rank pari passu with the Bonds, Holders will lose some (which may be
substantially all) of their investment in the Bonds.
1.6
NOMINEE ARRANGEMENTS
Where, a nominee service provider is used by an investor to hold the Bonds or such investor holds interests in
Bonds through accounts with a clearing system (such as Euroclear, Clearstream, Luxembourg and/or DTC),
such investor will receive payments in respect of principal, interest (if any) or any other amounts due, as
applicable, solely on the basis of the arrangements entered into by the investor with the relevant nominee
service provider or clearing system, as the case may be. Furthermore, such investor must rely on the relevant
nominee service provider or clearing system to distribute all payments attributable to the Bonds which are
received from the Issuer. Accordingly, such an investor will be exposed to the credit risk of, and default risk in
respect of, the relevant nominee service provider or clearing system, as well as the Issuer.
In addition, such a holder of Bonds will only be able to sell the Bonds held by it prior to its stated maturity date
with the assistance of the relevant nominee service provider.
1.7
EXCHANGE RATE RISKS AND EXCHANGE CONTROLS
The Issuer will pay principal and interest on the Bonds in Norwegian Kroner, the currency of the Kingdom of
Norway. This presents certain risks relating to currency conversions if an investor's financial activities are
denominated principally in a currency or currency unit (the "Investor's Currency") other than Norwegian
Kroners. These include the risk that exchange rates may change significantly (including changes due to
devaluation of Norwegian Kroner or revaluation of the Investor's Currency) and the risk that authorities with
jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value
of the Investor's Currency relative to Norwegian Kroner would decrease (i) the Investor's Currencyequivalent
yield on the Bonds, (ii) the Investor's Currencyequivalent value of the principal payable on the Bonds and (iii)
the Investor's Currencyequivalent market value of the Bonds.

6

Government and monetary authorities may impose (as some have done in the past) exchange controls that
could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal
than expected, or no interest or principal.
In its financial guidelines, the Issuer has decided that it will not have net currency positions, and so any foreign
currency positions are hedged to the fullest extent practicable.
7

2. STATEMENT OF RESPONSIBILITY
The Issuer, Kommunalbanken AS (org.no. 981 203 267 and registered address Haakon VII's gate 5, 0161 Oslo,
Norway) accepts responsibility for the information contained in this Securities Note. The Issuer confirms that,
having taken all reasonable care to ensure that such is the case, the information contained in the Securities
Note is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its
import.

Oslo, 5 July 2017

On behalf of the Issuer

(sign)
Håvard Thorstad, Acting CEO

8

3. DETAILED INFORMATION ABOUT THE SECURITIES
The following summary contains basic information about the Bonds. It is not intended to be complete and it is
subject to important limitations and exceptions. Potential investors should therefore carefully consider this
Securities Note in connection with the Registration Document, including documents incorporated by reference
and the attached bond agreement for the Bonds, before a decision is made to invest in the Bonds.

ISIN number:
N0 0010794373
Name of the loan:
Fixed to Floating Rate Kommunalbanken AS Perpetual Additional Tier 1 Bond
Issue 2017 with Issuer's Call Option.

Borrower/ Issuer:
Kommunalbanken AS
Security Type:
Additional Tier 1 bond issue (No. Evigvarende fondsobligasjon). The Bonds are
unsecured.
Amount:
NOK 1,200,000,000
Denomination Each Bond:
NOK 1,000,000
Currency:
Norwegian Kroner, the lawful currency of the Kingdom of Norway (NOK)
Securities Form:
The Bonds are electronically registered in bookentry form with the Securities
Depository.
Disbursement/ Settlement/ 21 June 2017
Issue date:
Interest Bearing From and Issue Date
Including:
Interest Bearing to:
Maturity Date
Maturity Date:
Perpetual
Interest:
Fixed:
3.26 % p.a. from and including the Issue Date to, but not including, the Interest
Payment Date in June 2027.

FRN:
Reference Rate + Margin, from and including the Interest Payment Date in June
2027. If the Interest becomes negative, the Interest shall be deemed
to be zero.
Reference Rate:
3 months NIBOR
Margin:
1.50 per cent p.a.
Day Count Fraction:
Fixed:
30/360

FRN:
Actual/360
Issue price:
100%
Business Day Convention:
Fixed:
No adjustment

FRN:
9

Modified following
Yield:
Fixed:
Dependent on the market price. Yield is 3.26 % p.a. assuming a price of 100 %.

FRN:
Dependent on the market price. Yield for the first Interest Period will be
notified 2 Banking Days prior to the Payment Date in June 2027.

For future Yield, the Interest Rate will be set two Banking Days prior to each
Interest Payment Date.

Interestrate Determination
17 June 2027, and thereafter two Business Days prior to each Interestrate
Day:
Adjustment Date

Interestrate Adjustment

Date:
From and including the Interest Payment Date in June 2027.
Interest Payment Date:
Fixed:
21 June each year to, but not including, the Interest Payment Date in June
2027.

FRN:

21 March, 21 June, 21 September and 21 December from and including the
Interest Payment Date in June 2027.

Interest Period:
Fixed:
The annual period between each 21 June to, but not including, the Interest
Payment Date in June 2027

FRN:
The quarterly period between each 21 March, 21 June, 21 September and 21
December from and including the Interest Payment Date in June 2027.
Amortisation:
The Bonds will run without instalments and have a perpetual tenor. The Bond
Agreement includes three types of call options. See Call Options.
Time limit on the validity of VPS (the Norwegian central securities depository) will credit due interest and
claims:
principal to the Bondholders. The limitation period for any interest and
principal claims is in accordance with Norwegian legislation, i.e. currently 3
years for interest and 10 years for principal amount.
Call Options:
The Bond Agreement includes three types of call options as described below.
Ordinary call: The Issuer may, at its discretion, call all the Bonds on 21 June
2027 and on each subsequent Interest Payment Date.
Regulatory call: If the applicable regulatory framework is amended in a manner
that implies that the Bonds cannot, in parts or in whole, be considered
additional tier 1 capital, the Issuer may call all the Bonds on each interest
payment date following such amendment.
Tax call: If the tax treatment of the Bonds for the Issuer is materially amended,
the Issuer may call all or parts of the Bonds on each Interest Payment Date
following such amendment.
The redemption price upon exercising the call options above shall be 100% of
par value of the called Bonds. Each Bond's Denomination may be adjusted in
10

Document Outline

#1">Securities_Note_Kommunalbanken_AS_ISIN_NO_0010794373_dated 5 July 2017
#19">NO0010794373_LA