EIB cements sovereign class positioning with a new EUR 5 billion benchmark 10yr issue

• The only benchmark issuer alongside governments in all key maturities from 3 to 30 years

The European Investment Bank today priced its new EUR 5bn 10yr bond, under the Euro Area Reference Note (EARN) programme. The 10-year bond carries an annual coupon of 3.125% and a final maturity date of 15 October 2015. The bond was priced at a spread of mid-swap minus 2.5bp equivalent to +8.1bps over the Bund 3.25% due July 2015.

Bookrunners for the transaction were Credit Suisse First Boston, JP Morgan, SG CIB and UBM.  Senior Co-Leads were Barclays, BNP Paribas, Caboto, Citigroup, Deutsche Bank, Dresdner, HSBC, Morgan Stanley, Nomura, and UBS.  Co-Leads were ABN Amro, Bank of China, Calyon, Goldman Sachs, ING, IXIS CIB, Lehman Brothers, Merrill Lynch, and RBS.  Selling group members were Banca Akros and Nordea. 

The transaction was a perfect fit. First, this issue catered to investor demand at 10-years following a period of limited government bond supply, in an environment where enhanced yield is offered only in medium-long maturities. Additionally, it refreshed EIB's sovereign-class EARNs curve by providing a new current coupon 10-year benchmark, following successful transactions at the 15- and 30-year maturities.

The order book grew rapidly from the instant it was launched reaching in excess of EUR 7bn. Over 150 investors around the world participated in this bond issue, including new accounts. EIB was particularly successful in attracting interest from Central Banks/Government Institutions and Insurance Companies/Pension Funds, which accounted for more than half of the order book. The geographic breakdown was approximately 95% in Europe and 5% in Asia. Within Europe, the strongest demand was from Italy and the U.K.

Listing on EuroMTS will be effective as of Thursday. The notes are also ECB eligible for Repo transactions as of September 15. With this issue, the EARNs curve is comprised of 12 benchmarks of EUR 5 billion or more in size, all tradable on EuroMTS, covering maturities from 2006 to 2037, with total outstanding volume of over EUR 62 billion.

With this issue, EIB has now raised the equivalent of EUR 44.5bn (out of the 2005 annual program of around EUR 50bn), of which almost EUR 18.5 bn has been raised through EUR transactions, with the EARNs programme representing almost EUR 11.5 bln of this amount.

Final Distribution:

This transaction completes EIB's EARNs curve and further cements EIB's position as a European sovereign-class benchmark issuer.  EIB is now the only borrower to complement sovereigns with benchmark issues of EUR 5 billion size in a maturity range from 3-years out to 30-years. said René Karsenti, Director General of Finance at the EIB.

John Fleming, Global Head of Syndicate at CSFB stated:  "This EARN benchmark marks a further step in the development of the EIB's Euro benchmark programme.  This issue matches current investor demand for 10-year paper while also successfully completing the EARNs benchmark curve.  The EARNs curve now has benchmarks at all maturities from 3- to 30-years, reinforcing EIB's position as a sovereign class borrower."

Olivier Vion, Vice President at JPMorgan commented:  "The EIB has addressed demand for a much awaited new on the run 10 year liquid EARN. 10 year is the benchmark maturity in the Euro market and by issuing this new EUR 5 billion October 2015 the EIB has completed its curve of highly liquid MTS traded benchmarks. The EIB successfully continues its strategic approach of the market while responding to investor needs. Price guidance was in line with market expectations and the EIB existing curve. As a result, books were rapidly oversubscribed, making this second EARN transaction of the year for the EIB an undisputed success."

Mrs Zeina Bignier, Head of Public Sector Origination at SG CIB commented:  "The success of the EUR 5 billion Euro Area Reference Note ("EARN") with a final maturity date of 15 October, 2015 demonstrates one more time the EIB capacity in meeting the investors' demand. The new 10 year fits perfectly the market in terms of pricing, timing and maturity with 10-years issues from governments and sovereign relatively rare."

Pietro Bianculli, Head of Debt Syndicate at UBM, commented: We are absolutely delighted with the success of this new 10-year EARN. This issue highlights one more time the EIB's unique standing among investors and the pertinence of the EARN strategy. The good performance of the distribution in Italy reflects investors' desire for safe, liquid securities.

Summary terms and conditions for the new bond issue

The European Investment Bank, based in Luxembourg, was set up under the Treaty of Rome in 1957. Owned by the European Union Member States, the EIB is the EU's long-term lending institution, financing projects that promote European economic development and integration. Besides supporting projects in the Member States, its main lending priorities include financing investments in future Member States of the EU. The EIB operates on a non-profit maximising basis and lends at close to the cost of borrowing. The Bank's consistent AAA rating is underpinned by firm shareholder support, a strong capital base, exceptional asset quality, conservative risk management and a sound funding strategy.