EIB prices fifth global EUR5 billion issue under the EARNs programme

The European Investment Bank today priced its fifth global EUR 5 billion issue under the Euro Area Reference Note (EARN) programme. The 10 year bonds, carrying an annual coupon of 3.625% and a final maturity date of 15th October 2013, were re-offered at a spread of 17 bps over the Bund 4.5% due January 2013. This equates to a curve adjusted spread of 7bps over the Bund curve which represents the tightest margin over German government bonds ever achieved by a supranational / agency issuer on a EUR5 billion EuroMTS eligible transaction.

Bookrunners for the transaction were Citigroup, Deutsche Bank, and Nomura. Senior Co-Leads were Barclays Capital, BNP Paribas, CSFB, Dresdner Kleinwort Wasserstein, HSBC, JP Morgan, Morgan Stanley, Société Générale and UBS. Co-Leads were ABN AMRO, CDC-Ixis, Crédit Agricole Indosuez, Goldman Sachs, ING, Lehman Brothers, Merrill Lynch, and UniCredito Banca Mobiliare. Sellling Group members were Banca Akros, Bank Pekao and Nordea.

Formal bookbuilding for the new on-the-run sovereign class 10 year benchmark began on Tuesday 10th June. EIB followed their established strategic issuance model, characterised by full transparency and best market practice. Initial price talk was 15-18 bps over the reference Bund. This was later revised to +16 to 17bps at the formal launch on 11th June. By pricing the bonds at Bunds +17 bps, EIB was able to attract a high calibre order book, which was significantly oversubscribed at both the lead manager and co-lead manager level.

Over 150 investors world-wide participated in the bond issue. EIB was particularly successful in diversifying its existing investor base for Euro denominated investments in Japan and amongst Bank funds and fund managers. Approximately 26% of the bonds were placed with Japanese accounts, and there was also particularly strong demand from the UK (27%) and the Nordic region (16%). Fund managers took around 12% of the bonds, with insurance companies and pension funds accounting for 10%. Banks accounted for some 47% of the total placement (including treasury, regional and money center accounts).

Secondary market trading in the issue began immediately on EuroMTS, joining the 9 other EARNs already trading on the electronic platform. The EARNs curve now comprises 12 benchmarks covering maturities from 2004 to 2013, with outstanding volume of over EUR 58 billion. The entire EARNs curve trades on MTS, with the ten largest benchmarks (worth EUR 53 billion) trading on EuroMTS.

EIB estimates its total funding for 2003 to fall within the EUR40-42 billion equivalent range. With this issue EIB has now raised the equivalent of approximately EUR31 billion in the international capital markets.

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