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EIB launches groundbreaking Euro Area Reference Note Issuance Facility (EARNs™)

Reference: 1999-015-EN

Date: 02/03/1999

The European Investment Bank, the financing institution of the European Union, AAA rated, and Europe's largest non-governmental issuer of bonds, announced today its first facility allowing for the issuance of benchmarks in euro in a transparent and consistent way. This is a continuation of the Bank's ongoing pro-active euro-strategy, started in 1997, aimed at the creation of a liquid and widely diversified euro market.

With this initiative the EIB aims at reinforcing its position in the euro capital market and establishing its bonds as the best complement to those of major European governments. The EIB will issue, in 1999, bonds in euro of some 20 billion of which up to 15 billion in highly liquid benchmarks across the whole maturity spectrum. The EIB's total 1999 funding programme will cover some 30 billion euro.

EIB has appointed ABN AMRO and Paribas to arrange the Euro Area Reference Note (EARN) Issuance Facility, which is designed to further EIB's policy of liquid yield curve creation.

From now on EIB's benchmarks in euro will be referred to as EARNs.

The EARN facility is a flexible issuance platform, which seeks to build on the existing euro denominated EIB yield curve. It sets a framework under which future benchmark issuance will evolve in the euro environment.

The EARN facility has been designed to enhance liquidity in outstanding and new EARN issues by:

  • Creating issues of a large size. This will be achieved by large initial issue sizes (EUR 2 billion minimum) and regular increases either through syndication or auction (target size EUR 3 billion to EUR 5 billion). The facility also offers the flexibility of using exchange offers to consolidate any less liquid series or other outstanding EIB issues into more liquid current coupon EARNs. EIB will use auctions depending on market conditions.
  • Organising and co-ordinating market making through the appointment of 10 dedicated primary dealers. Each primary dealer has committed to provide liquidity in EARNs by way of extensive secondary trading and repo market making responsibilities.
  • In addition, dealers have been appointed to be active in both the EARNs secondary market and repo market on a `best efforts' basis.

The EARN Facility will also aim to enhance transparency and consistency in EIB's issuance through:

  • The introduction of a regular and structured issuance procedure.
  • Regularity of minimum issuance of EUR 2 billion per quarter.
  • Strategic maturity selection aimed at creating a liquid EARN yield curve.
  • Standardised launch process, format and documents.

The following Primary Dealers have been appointed:

  • ABN AMRO
  • BANCA D'INTERMEDIAZIONE MOBILIARE IMI
  • DEUTSCHE BANK
  • GOLDMAN SACHS INTERNATIONAL
  • HSBC MARKETS
  • MERRILL LYNCH INTERNATIONAL
  • NOMURA INTERNATIONAL
  • PARIBAS
  • SANTANDER INVESTMENT
  • WARBURG DILLON READ

The following Dealers have been appointed:

  • BANCA COMMERCIALE ITALIANA
  • BANCA NAZIONALE DEL LAVORO
  • BANCO BILBAO VIZCAYA, S.A.
  • BANQUE NATIONALE DE PARIS
  • BARCLAYS CAPITAL
  • CABOTO-GRUPPO INTESA
  • CAIXA GERAL DE DEPOSITOS
  • CDC MARCHES
  • COMMERZBANK AKTIENGESELLSCHAFT
  • CREDIT AGRICOLE INDOSUEZ
  • CREDIT SUISSE FIRST BOSTON
  • DRESDNER KLEINWORT BENSON
  • GENERALE DE BANQUE
  • ING BARINGS
  • J.P. MORGAN SECURITIES LTD
  • LEHMAN BROTHERS INTERNATIONAL (Europe)
  • MERITA-NORDBANKEN GROUP
  • MORGAN STANLEY DEAN WITTER
  • SALOMON SMITH BARNEY INTERNATIONAL
  • TOKYO-MITSUBISHI INTERNATIONAL PLC
  • WESTDEUTSCHE LANDESBANK GIROZENTRALE