The EIB prices a new 3-year US$ 3bn Global Bond
The European Investment Bank (EIB) priced today a successful 3-year US$ global bond. The new US$ 3 billion benchmark with a maturity of 30 August 2005, is the EIB's third US$-denominated Global bond in 2002. Lead managers are JPMorgan, Nomura and Salomon Smith Barney.
The EIB's US$ funding program is a major building block of the Bank's presence in the international capital markets. This year, after issuing its first US$ Global in early January, and a 5-year transaction in February, the EIB recognized that a follow-on 3-year transaction was the most appropriate market segment to target. In addition, the transaction was designed to further build on the EIB's growing profile amongst US investors.
The EIB responded to investor preferences and designed today's transaction with attractive features that were very well received:
Primary Market Transparency
The EIB maintained the syndicate strategy first implemented for the recent 5-year transaction with a Joint Lead Pot, Co-Lead Pot plus Co-Lead retention system to enhance the transparency of the order-taking process and to provide a solid foundation for improved performance in the secondary market.
Enhanced Secondary Market Trading Potential
The large US$ 3 billion size was deemed by many investors and dealers as the optimum to achieve a high level of liquidity and maximum performance potential. Additionally, the size enables the bonds to benefit from electronic secondary trading on the TradeWeb® system immediately on the settlement date.
The bond was priced at an Issue Price of 99.821%, carries a coupon of 4%, resulting in a spread of 88bps over the 3.375% US Treasury due 30 April 2004.
Final Distribution:
| By Geographical Region: | By Investor Type: |
| Europe - 12% | Central Bank/Govt Institutions - 43% |
| U.S. - 40% | Fund Managers - 9% |
| Asia - 41% | Bank Investment Portfolios - 40% |
| Other - 7% | Insurance Co's/Pension Funds - 6% |
| Other - 2% |
"With this new benchmark transaction, the EIB underlines furthermore its strategic approach to the USD market, consistent with the overall funding policy. We devote great importance to transparency and secondary market liquidity. This strategy has led to the creation of a liquid benchmark curve, consisting of more than USD 28 billion of which USD 17 billion is in Global format." said René Karsenti, Director General and Treasurer at the EIB.
"The size and breadth of US distribution is a clear indication that the US Dollar Global issuance strategy implemented by the EIB continues to enhance and deepen their access to US Investors. This distribution was all the more impressive as the issue was priced at a significant premium to US Agencies." Michael Ridley, Head of European Capital Markets at JPMorgan
Brian Lawson, Head of International Syndicate at Nomura commented that "Of particular note is the success of the deal while pricing EIB so far through the US Agency curve in comparison to historical relative trading levels. This achievement bears even more weight when one considers that 40% of a first rate order book came from accounts based in the US time zone, including a significant number of smaller tickets from US real money accounts."
"A great demonstration and further evidence of the robust, worldwide investor support for EIB's Global dollar programme." Charlie Berman, Co Head of European Credit Markets
The European Investment Bank is the European Union's international financing institution - the EU member states are its shareholders. With an AAA/Aaa credit rating, the EIB raises funds in the capital markets to provide long-term funds in support of projects furthering EU economic objectives.