Favourable market reception for European Investment Bank’s (EIB) first bond in Romanian Leu

European Investment Bank’s first bond issue in Romanian Leu, which was open for subscription by the public from 26 April to 4 May, settles today. The bond, originally announced for a minimum benchmark size of RON 150 million has a final size of RON 300 million and, at seven years, is noteworthy for being the longest dated traded issue in the market.

The AAA-rated issue carries an annual coupon of 7% and was offered at an issue price of 100.25%. Official trading of the bonds at the Bucharest Stock Exchange is expected to begin shortly.

ABN AMRO Bank (Romania) was the financial advisor, distribution and paying agent. The offer arranger was ABN AMRO Securities (Romania).

A diverse, mainly institutional, investor base subscribed for the bonds. Although a fully domestic issue launched under Romanian law, 13% of investors were foreign.

This issue extends EIB’s strong track record in contributing to the development of markets in new EU Member States, potential future member countries and selected EU partner countries, where borrowing in these currencies aims to both assist the capital market evolution and, where possible and appropriate, also to support the EIB’s lending activities.

The EIB, the Bank promoting European objectives - owned by the EU Member States, has the highest issuer credit rating of Aaa/AAA/AAA (Moody’s/Standard & Poors/Fitch). The Bank is the world’s largest supranational borrower and lender, and is one of the largest and most frequent borrowers in the international capital markets. In 2006 it issued a total of EUR 48bn in 24 currencies.

EIB’s Barbara Bargagli-Petrucci, Director, Head of the Capital Markets Department, said:

“Contributing to the development of new capital markets is a resource intensive exercise. We are thus very pleased to see this transaction become a reality, adding to EIB’s strong track record of complementing government issuance in new EU Member States.”

Claudia Butac, General Manager of ABN AMRO Securities (Romania) S.A., said:

“We are delighted that the EIB Romanian Leu bond issue was so well received by such a diverse investor group, in spite of the temporary lack of liquidity during the last couple of weeks. In percentages, about 64 % banks, 29% insurance companies, 5% corporate and almost 1.5% investment funds and asset managers seized the opportunity to invest in this triple-A rated RON bonds which will lengthen the local yield curve up to 7 years.”

Background information on EIB

EIB funding strategy and results in 2006

The Bank’s funding strategy combines a consistent and transparent approach with flexibility and innovation, both in terms of product and maturity. Under its 2006 funding program the Bank raised EUR 48bn in 24 different currencies. The Bank’s three core currencies (EUR, GBP, USD) accounted for 83% of funding.  In currencies of the New EU Member States and Accession Country Currencies the Bank raised EUR 1.4bn equivalent.  

Profile of EIB

The European Investment Bank, based in Luxembourg, was set up under the Treaty of Rome in 1958. 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.

The Bank’s shareholders are the member states of the European Union. The focus of EIB’s lending activities is to finance projects that promote balanced regional development and economic and social cohesion in an enlarged EU. Other priority objectives for the Bank’s lending activities are:

• a competitive and innovative European economy thanks to additional funding for research and innovation
• efficient and easily accessible trans-European transport and energy networks (TENs)
• support for small and medium-sized enterprises
• the "climate change” dimension of environmental protection but also that of conserving natural resources and improving the quality of life in urban areas
• the objectives of efficiency, diversification and security in the energy sector 
• support for countries preparing for EU accession, EU neighbourhood countries & Partner countries benefiting from EU development and cooperation policies

The majority of the Bank’s outstanding loans have been for infrastructure projects, with the largest share taken by transport projects. Other key areas of infrastructure lending have been the energy, water and telecommunications sectors. Apart from infrastructure, other areas of lending have included loans to SMEs via financial intermediaries, as well as loans to industry, healthcare, education, services and agriculture.

Background information on ABN

ABN AMRO Bank (Romania) S.A., a subsidiary of ABN AMRO NV, one of the world’s largest banks with total assets of more than EUR 986 billion and a presence in over 60 countries and territories, has been present in Romania since November 1995.  ABN AMRO Romania currently operates in 15 cities in Romania (Arad, Bucharest, Brasov, Bacau, Cluj, Constanta, Craiova, Galati, Iasi, Oradea, Pitesti, Ploiesti, Sibiu, Tirgu-Mures and Timisoara). Using its worldwide network, the bank provides integrated financial products and services for its commercial, institutional and consumer clients.

ABN AMRO Securities (Romania) S.A. a subsidiary of ABN AMRO NV, is the bank's brokerage company licensed by The National Securities Commission (CNVM) to provide origination, investment, brokerage and consulting services according to applicable Romanian legislation. The company buys/sells on behalf of its clients equities and bonds listed on the Bucharest Stock Exchange (BVB) and on the Electronic Exchange Rasdaq (RASDAQ) and traded on the platform of the Bucharest Stock Exchange.