Ratings

Class	Prelim. credit rating*	Prelim. amount	Available credit support (%)	Legal final maturity
Säkerställda Obligationer (Swedish Covered Bonds)	AAA	Up to €10 billion European MTN and unlimited amount of Swedish domestic covered bonds	As notified by Standard & Poor's, initially 1.29	According to the terms and conditions of the notes
*The rating on the program is preliminary as of June 16, 2006 and is subject to change at any time. A final credit rating is expected to be assigned on the closing date subject to a satisfactory review of the transaction documents and legal opinion. Standard & Poor's rating addresses timely interest and ultimate principal.

Transaction Participants
Effective date for conversion of outstanding bonds to covered bonds	June 30, 2006
Collateral	A pool of first-ranking mortgage loans secured by freehold and leasehold properties located in Sweden including further eligible exposures as defined under the Swedish Covered Bond Act
Issuer	Nordea Hypotek AB
Originator	Nordea Hypotek AB
Servicer	Nordea Hypotek AB
Principal paying agent and agent bank in relation to assets in the pool	Nordea Bank AB
Independent inspector	Mr. Sven Höglund (KPMG) appointed by the Swedish FSA (Sw. Finansinspektionen)
Listing	Stockholm Stock Exchange for Swedish domestic covered bond program, London Stock Exchange for bonds under the European MTN program, or other exchange as agreed by Nordea Hypotek AB and the dealers
Dealers under the Swedish domestic covered bond program	ABN AMRO Bank N.V., Danske Bank A/S, Swedebank (Föreningssparbanken AB), Nordea Bank Danmark A/S, Skandinaviska Enskilda Banken AB, Svenska Handelsbanken AB
Dealers under the European MTN program	ABN AMRO Bank N.V., Barclays Capital, Bayerische Hypo- und Vereinsbank Bank AG, BNP Paribas, Citibank Global Markets Ltd., Deutsche Bank AG, London branch, Dresdner Bank AG, HSBC Bank PLC, IXIS Corporate & Investment Bank, JPMorgan Securities Ltd., Nordea Bank Danmark A/S, UBS Ltd.
Pool interest rate hedge provider	Nordea Bank AB and further eligible third-party interest swap providers
Pool currency rate hedge provider	Nordea Bank AB and further eligible third-party currency swap providers
Bank account provider	Nordea Bank AB

Supporting Ratings
Institution/role	Ratings
Nordea Bank AB as pool interest rate hedge provider, pool currency rate hedge provider, and bank account provider	AA-/Stable/A-1+

A preliminary credit rating has been assigned to the €10 billion European MTN program and unlimited amount of Swedish domestic covered bond program to be issued by Nordea Hypotek AB. The covered bonds to be issued under this program will also carry a 'AAA' rating (including all series of outstanding bonds that will be converted into covered bonds on June 30, 2006). The rating reflects Standard & Poor's level of comfort in the Swedish covered bond legislation and the framework it provides to be able to delink the rating on the covered bonds from the rating on the issuer. The preliminary rating assigned also reflects the credit quality of the underlying assets and their cash flows, in particular, the analysis verifying that the notes will be repaid under 'AAA' stress test scenarios.

The Swedish domestic covered bonds including converted bonds and the covered bonds issued under the European MTNs together are referred to as the covered bonds.

The basic structure of the program is shown in the following chart.

LUSO provides the legal framework for the issuance of covered bonds. Standard & Poor's has concluded that the provisions of the legislation provide the appropriate framework for a delinked rating approach. The delinked approach is where the rating on the issued securities is not dependent on the issuer's counterparty credit rating.

In its detailed analysis of the legal framework, Standard & Poor's has reviewed the following legal issues that are deemed key for the delinked approach:

• The isolation and priority to assets in the cover asset pool in the event of an insolvency of the issuer;
• No acceleration of debt upon the insolvency of the issuer;
• No moratorium or forced restructuring upon the insolvency of the issuer;
• The survival of the hedging agreements upon the insolvency of the issuer;
• The ability for a manager to contract liquidity by sale of assets to mitigate any mismatch risk between the asset and the liability maturities; and
• The ability to overcollateralize the asset pool to achieve a rating above that of the originator/issuer.

LUSO defines covered bonds as promissory notes and similar comparable debt instruments that are registered to the cover pool of the issuer. This means that a holder of a covered bond has, in the event of the issuer's bankruptcy, a preferential claim to the cover pool, primarily consisting of mortgage loans, publicly owned assets, and some qualified supplementary assets. These assets must be continuously registered and must be kept separate from the other assets of the issuer. The counterparties to derivative agreements entered into by the issuer in relation to the covered bonds and the underlying collateral are also entitled to preferential claim over the collateral in the cover pool.

A more detailed explanation of the analysis on the Swedish covered bond legislation can be found in the article "New S&P Approach For Rating Swedish Covered Bonds Opens The Way To 'AAA'" (see "Related Articles").

LUSO enables Swedish banks and credit market companies to issue covered bonds. Additionally, it defines eligibility criteria for the type of assets that may and may not be included in the cover asset pool.

The cover pool consists of mortgage loans and public credit exposure, i.e., claims against debtors with high creditworthiness, such as the Swedish State, Swedish municipalities, or central banks.

The collateral for mortgage loans will consist of:

• (i) Pledged real property designated for residential, agricultural office, or business purposes;
• (ii) Pledged site-leasehold rights designated for residential, office, or business purposes;
• iii) Pledged tenant-owners rights; or
• (iv) Pledges in corresponding foreign collateral from within the European Economic Area that meet the eligibility requirements set by LUSO.

Further relevant restrictions regarding the mortgage loans include:

• LTV ratio restrictions i.e., 75% for residential property, 70% for agricultural properties, 60% for commercial property, or 100% for certain government backed exposure;
• Revaluation of properties if severe market value decreases were to be observed;
• The exposure to commercial lending activities not exceeding 10% of the cover pool.

According to LUSO the cover pool may also include a limited amount of substitute assets that are defined within the Swedish legislation. The supplementary collateral may constitute no more than 20% of the cover pool. Under special circumstances and for a limited period of time the Swedish FSA may allow the supplementary collateral to constitute no more than 30% of the cover pool.

Substitute assets include cash, investments, and claims guaranteed by the Swedish State, Swedish municipalities, their European equivalents, or foreign states or central banks where the investment or claim is in the same currency as it is refinanced with. Subject to separate FSA approval, substitute assets may also include exposures to certain financial institutions (that meet certain credit and liquidity criteria).

According to LUSO, the issuer shall ensure that the value of the cover pool at any given time exceeds the total value of the claims that can be made against the issuer on account of the covered bonds and the derivative agreements. In addition, the net present value of the assets in the cover pool must at any given time exceed the net present value of the debts under the covered bonds, whereas the present value of the derivative agreements shall also be taken into consideration.

If the assets in the cover pool meet with the eligibility criteria prescribed by the Act at the time of the bankruptcy decision, they must be kept separate from the other assets and payables of the issuer. As long as the cover pool meets with the requirements of the Act, the bankruptcy will not result in premature redemption or suspension of payments to holders of covered bonds.

Nordea Hypotek will issue two different sets of covered bonds:

• European MTNs; and
• Swedish domestic covered bonds.

Nordea Hypotek's covered Swedish benchmark bond program constitutes a framework under which Nordea Hypotek has the opportunity to continuously raise funds with different terms and conditions in Swedish krona. Nordea Hypotek will also raise funds under the European MTN program. Covered bonds can be issued in bearer and registered form and in any currency as further specified in the terms and conditions.

As of June 30, 2006 Nordea Hypotek will have eight series of Swedish benchmark bonds outstanding (series 5513, 5517, 5518, 5519, 5520, 5521, 5522, and 5523) and two series of EMTNs outstanding (ISIN XS0159837797 and ISIN XS0151238770). Each of those series will, effective June 30, 2006, be converted into covered bonds. The conversion is effected by Nordea Hypotek registering those series in the covered bond register. The conversion does not require any activity on the part of the holders of those series (apart from an amendment of terms and conditions of the EMTN series that has been agreed with the holders of those series).

All covered bonds issued (including those outstanding bonds that are being converted into covered bonds as per above) will rank pari passu with each other regardless of type.

LUSO does not allow a receiver-in-bankruptcy to refinance maturing covered bonds after an insolvency of the issuing institution. As this is one of the keys to Standard & Poor's assessment of covered bonds and the bond's ability to pay interest and principal on a timely basis, it would normally prevent a delinked rating approach from being applied. However, Standard & Poor's has concluded that the receiver-in-bankruptcy would usually be able within a reasonable time to sell assets within certain limits in the market and thereby create the necessary liquidity without raising new debt. This solution has also been applied for structured covered bonds in the U.K. and The Netherlands.

Standard & Poor's will, during the quarterly surveillance cycles, assess whether the liquidity mismatch calculated using Standard & Poor's Covered Bond Monitor can be closed through the abovementioned sale of assets.

In addition, Nordea Hypotek has, subject to certain restrictions, the right to accelerate the mortgage assets at each reset date if Nordea Hypotek is unable to refinance these thus also facilitating the liquidity management in the insolvency.

The Nordea Hypotek cover pool comprises a total number of 510,000 loans and a volume of SKr251 billion as of March 28, 2006. In terms of borrowers, the cover pool consists of 82.0% residential mortgages and 3.6% commercial mortgages. Of the residential mortgage subpool, 78.6% is secured by owner-occupied homes. There are currently only domestic loans registered in the cover pool all of which are denominated in Swedish krona. Due to ongoing refinancing of mortgages in the low yield environment, only 24.5% of the cover pool has a seasoning of more than 60 months. Finally, the pool also comprises some 14.4% exposures which are either eligible loans to the Swedish public sector or mortgage loans that benefit from a guarantee of a public sector entity. Table 1 provides an overview of the LTV ratio stratification of the cover pool. Table 1 LTV Ratio Stratification Of The Cover Pool LTV % Total (%) Residential (%) Multifamily (%) Commercial (%) 0-40% 47 41 58 66 41-50% 10 9 10 11 51-60% 8 7 27 9 61-70% 11 12 3 7 Chart 2 provides further detail on the distribution of the commercial loans by property type. The geographical distribution of the cover pool is centered around the large cities in Sweden with the three largest cities Stockholm, Göteborg, and Malmö accounting for two-thirds of the cover pool. Table 2 provides a more detailed overview of the geographical distribution. Table 2 Geographical Pool Distribution* (%) Stockholm 35.0 Västra Götaland 20.4 Skaane 10.7 Uppsala 4.9 Halland 3.4 Värmland 3.2 Jönköping 2.7 Västernorrland 2.4 Östergötland 2.4 Västerbotten 2.3 *Other regions are below 2% By repayment type the cover pool assets exhibit the following characteristics shown in table 3. Table 3 Cover Pool Asset Characteristics   Percentage of balances Annuity payments 59.2 Constant amortization 30.4 Bullets 7.9 Others not mentioned above 2.5

The credit analysis on the mortgage credit assets involves assessing the credit quality of the mortgage pool by estimating the credit risk associated with each loan in the pool. The aggregate of this risk is then calculated to assess the overall credit quality of the pool. The credit risk associated with each loan in the pool is quantified by estimating each loan's probability of default leading to foreclosure and its loss severity (the loss that would be realized as a result of foreclosure). The potential loss associated with a loan can therefore be calculated by multiplying the foreclosure frequency with the loss severity. To quantify the potential losses associated with the entire pool, each loan's foreclosure frequency and loss severity is weighted by its percentage of the total pool balance. A WAFF, or cumulated percentage of the assets that are expected to default over their life at the desired rating level and a WALS, or percentage of the outstanding balance that is expected to be lost upon a loan defaulting at the desired rating level are then calculated at the desired rating level. The product of these two variables estimates the required loss protection.

The credit analysis for mortgage assets backed by Swedish municipalities or the Swedish state was performed through use of the latest version of CDO Evaluator. For this purpose a joint default analysis was undertaken. That means that a combined scenario default rate of the portfolio of borrowers and the respective guarantors was derived.

Standard & Poor's typically evaluates a pool of covered bonds on a cash flow basis to determine whether, under conditions of severe economic stress, the cash flow generated by the assets would be sufficient to meet the debt service payments due on the liabilities in a timely manner. The aim of the cash flow analysis is to assess the pools with respect to credit risk as described above, market risk in the form of interest rate and currency risk, liquidity risk as a result of cash flow mismatches between assets and liabilities in terms of maturity, and an appropriate stress testing thereof.

Covered Bond Monitor is a Monte Carlo model, which simulates about 100,000 different economic scenarios, or more if required, to establish an accurate default distribution. Each scenario produces a different path for interest rates and exchange rates for each currency included within the balance sheet of the issuer. The purpose of the cash flow analysis is to assess whether the pool generates sufficient asset cash flows to honor all liabilities on a timely basis, after consideration of:

• Defaults as a result of credit risk as described above;
• Market risk in the form of interest rate and currency risk; and
• Liquidity risk.

The analysis is based on the assumption of a static pool, that is, no active pool management or new issues other than servicing the liabilities as they come due and, if necessary, taking out bridge financing to cover temporary liquidity needs. This assumption stems in turn from Standard & Poor's central rating assumption, where the issuer is insolvent and the pool is managed to its conclusion.

However, Standard & Poor's does not currently apply cash flow stresses to interest, currency, or liquidity risk. This is due to the fact that Nordea Hypotek has agreed, if necessary in order to maintain the then current targeted rating of the covered bonds, to comply with the Covered Bond Monitor compliance test within 30 days of a downgrade of Nordea Hypotek to lower than 'A-1+'. The Covered Bond Monitor compliance test requires an issuer to maintain a sufficient level of liquidity and overcollateralization to support the rating assigned to the covered bonds.

Continual surveillance will be maintained on the issue until the notes mature or are otherwise retired. To do this, regular servicer reports detailing the performance of the underlying collateral will be analyzed, supporting ratings will be monitored, and regular contact will be made with the issuer to ensure that minimum servicing standards are being sustained and that any material changes in the issuers's operations are communicated and assessed.

• "European Legal Criteria for Structured Finance Transactions" (published on March 23, 2005).

• "The Market Weighs The Benefits Of A Unified Approach As Covered Bonds Expand Into New Jurisdictions" (published on June 14, 2006).
• "Summary: Nordea Bank AB" (published on March 28, 2006).
• "S&P Launches Covered Bond Monitor Analytical Tool, A Rating Agency First" (published on Feb. 14, 2006).
• "New S&P Approach For Rating Swedish Covered Bonds Opens The Way To 'AAA'" (published on July 11, 2005).
• "Expanding European Covered Bond Universe Puts Spotlight on Key Analytics" (published on July 16, 2004)
• "Request For Comment: Rating Criteria For Swaps In European Covered Bonds" (published on March 2, 2006).
• "Cash Flow Criteria for European RMBS Transactions" (published on Nov. 20, 2003).

All criteria and related articles are available on RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. The criteria can also be found on Standard & Poor's Web site at www.standardandpoors.com.