EIB launches DEM 3 billion euro-tributary issue

The European Investment Bank is launching its largest Deutsche Mark benchmark issue ever today - a DEM 3 billion Euro-tributary bond that is fungible with the EIB's outstanding EURO 2 billion and LIT 3 trillion 5% issues due on 15 April 2008. These issues will be fungible from their first coupon payment dates of 15 April 1999 and redenominated in EURO to total at present EURO 5 billion. The EIB is also for the first time providing investors with a new real-time screen-based cash and repo market facility for the issue.

Following a price discovery and book-building period, the issue was launched at a spread of 12 bps over the 5.25% Bund 04/01/08, with fees set at 0.15%.

The issue will give investors liquidity and pricing transparency through the market making commitment of a syndicate of eleven banks. Credit Suisse First Boston and Dresdner Kleinwort Benson are acting as joint bookrunners with Goldman Sachs International as out-of-order co-lead manager. The co-lead managers are ABN AMRO, Banque Nationale de Paris, Barclays Capital, Commerzbank, Deutsche Bank, Merrill Lynch, Warburg Dillon Read (Germany), and WestLB.

The syndicate is committed to making markets in amounts of DEM 10-25 million on a 10 pfennig bid offer spread. To ensure investors the full benefits of the issue's liquidity, the market makers will also quote a 10 cents bid-offer spread in odd-lots after its redenomination in EURO, up to 31 December 1999. The syndicate is also committed to quoting two-way repo prices in a maximum bid-offer spread of 20 bps in sizes up to DEM 25 million for spot/week, spot/2 weeks, and spot/1 month.

Syndicate members will publish cash and repo market prices on Reuters screens. A new series of composite screens have been established for this issue and subsequently other EIB benchmarks. These can be found under <<EIBBENCH>> and <<EIBREPO>>.

The issue continues the EIB's Euro-tributary issue programme, which is part of the Bank's strategy in preparation of EMU of establishing liquid European currency benchmarks to be converted into EURO after 1999. To date the Bank has issued over EURO 15.6 billion equivalent in 10 currencies for maturities ranging from 5 to 30 years.

EIB Director General of Finance, René Karsenti said: "The combination of size, pricing transparency in the primary and secondary markets, the real-time screen-based pricing, and the market making commitment in the cash and repo markets, will make this a key benchmark issue. It reconfirms the EIB's important position on European capital markets and strengthens our policy of contributing to the development of a widely diversified and liquid market for the EURO."