Skip to navigation

Skip to content

EIB builds on EARN facility achievements

Reference: 1999-120-EN

Date: 09/12/1999

The European Investment Bank is reinforcing its EARN (Euro Area Reference Note) facility for 2000. The Facility, which represents the culmination of EIB's euro-strategy over the last years, was set up to serve investors' needs by:

  • The Facility has so far enabled the Bank to establish the only non-government yield curve in the euro-area, with seven liquid benchmarks totalling EUR 24 billion, on every point from 2003 to 2009. In many maturities these bonds represent the main liquid "AAA"-alternative to government bonds.
  • The Bank intends to maintain the liquidity of its curve by frequent reopenings of the existing lines. At the same time, it plans to extend its term structure by issuance of EARNs in new maturities. The EIB expects to raise some EUR 8 billion or more under the Facility in 2000, with the objective to issue EUR 2 billion or more (subject to market conditions) on a quarterly basis.

Overall, the new documentation foresees a more flexible approach to issuance procedures, in order to tailor supply to actual prevailing investor demand.

Inter alia, the minimum size of a benchmark EARN will be reduced to EUR 1 billion, instead of the EUR 2 billion limit under the original programme (the target size of each EARN remains at EUR 3 to 5 billion). In addition, the EIB is to introduce "Targeted EARNs" allowing tranches to be issued in a flexible way up to EUR 1 billion.

Targeted EARNs can be lead managed by both Primary and Non-Primary Dealers. The aim is to then build these up into EARNs through a minimum EUR 1 billion reopening, which triggers Primary Dealers' market making responsibilities.

The modifications to the original programme have been decided on the basis of the experience gathered in 1999 and following extensive dialogue with the Dealers.

A review of the composition of the Dealer group will take place in the course of the year 2000 to enable monitoring of their performance over a meaningful period of time (the Facility is only eight months old). In the meanwhile it has been agreed to increase the group of Non-Primary Dealers with two new members; Société Générale Investment Banking and Caja Madrid.