New Euro 5 billion EIB 10-year EARN highly in demand

• High quality order book built rapidly to over EUR 12 billion
• Euro 5 billion issue priced at mid swaps minus 10 bp

The European Investment Bank today priced its second EUR benchmark Euro Area Reference Note (EARN) of 2007. The issue carries an annual coupon of 4.75% and has a final maturity date of 15 October 2017. The bond was priced at a spread of mid-swaps less 10bp, equivalent to 18.8bp over the DBR 3.75% due Jan 2017.

The choice of a 10-year tenor was a response to market conditions. The euro yield curve has continued to steepen with the 2s10s curve differential at over 20bp now, versus 6bp twelve months ago, while the yield on the 10-year Bund has risen by around 70bp over the past three months. In this environment, many investors have focused on the 10-year sector in preference over shorter dated bonds, given the increased pickup that 10-years offer. As an issuer owned by the EU Member States and thereby offering investors diversified sovereign-class exposure, the EIB was well placed to respond to investor demand.

Bookbuilding of the new EARN commenced on Monday 25th June, with an indicated spread range of -9 to -10bp to mid-swaps (DBR 3.75% Jan 17 + 18.7/19.7bp). The book built quickly and was fully subscribed by midday on the first day at EUR 5bn. By the close of the first day the book stood at EUR 8bn. The strength and quality of the book allowed the lead managers to accelerate the execution by a day and refine the guidance to mid-swaps - 10bp. The book continued to grow on the second day and closed earlier than had been anticipated at 10 a.m. GMT Tuesday at around EUR 12.5bn. The deal priced at the tight end of guidance at mid-swaps less 10bp, breaking new grounds in the primary market, tighter than the -9.5bp achieved in the EIB’s last 10-year EARN due October 2016 which was launched last year. The book was well diversified across Europe and by investor type, with orders from around 90 investors.

Distribution:

By Geographical Region	By Investor Type
France – 26%	Banks – 47%
UK/Ireland – 25%	Central Banks – 16%
Germany – 16% –	Asset Managers – 16%
Nordic countries – 15%	Hedge Funds – 10%
Southern Europe 5%	Insurance / Pension Funds – 11%
Benelux 4%
Asia 4%
Other – 5%

This transaction builds upon the EIB's long-standing commitment to providing sovereign-class liquidity in the EUR market. With the launch of this new October 2017 issue, the total volume of the EARN curve now exceeds EUR 71 billion. This issue is the 12th  “Eurobenchmark” listed on EuroMTS.

EIB estimates its funding requirements for 2007 to be up to EUR 50 billion equivalent. With this EARN, the EIB has issued a total of around EUR 32 billion  equivalent in 2007. Including this new EARN, EUR issuance accounts for around 30% of the 2007 funding program so far.

Bookrunners for the transaction were Barclays Capital, Deutsche Bank, Natixis and UniCredit Group (HVB). Senior Co-Leads were BNP Paribas, Citigroup, HSBC, JP Morgan, Lehman Brothers, Nomura, Merrill Lynch, Royal Bank of Scotland and Société Générale. Co-Leads were ABN Amro, Bank of China, Caboto, Calyon, Credit Suisse, Dresdner Kleinwort, Goldman Sachs, ING, Morgan Stanley and UBS. Selling group members were Banca Akros and Danske Bank.

Barbara Bargagli-Petrucci, Director, Head of Capital Markets Department at the EIB, said: ”The scale and quality of the orderbook and the speed of the bookduilding underline the strength of EIB’s positioning and responsive funding strategy.”

Sean Taor, Director, Head of Frequent Borrower Syndicate, Barclays Capital, said: “This is the first time that any quasi-sovereign benchmark in the 10-year sector has broken into double digits through Euribor. To do so with a 12.5bn book is a remarkable achievement. The EIB came to market at the right time with the right product and have been rewarded with an excellent transaction on all levels.”

David Shasha, Managing Director, at Deutsche Bank, said “This is the EIB’s most successful EARN in two years and its success reinforces the EIB’s position as the prime benchmark borrower in the Euro quasi-sovereign market.”

Thiébaut Julin, Director, origination Sovereign, Agencies and Supranational, Natixis, said: “The search for high credit standing combined with a lack of supply in the AAA world has allowed a very quick demand from a wide range of investors leading to a huge success of this new 10 year EARN”.  Pietro Bianculli, Director SSA Global Syndicate, at Unicredit MIB, said, "The total size of the book is definitely impressive but I want to stress also the granularity and the quality of the orders; the success of this new 10yr Benchmark confirms once again how attractive the EIB-EARN program is for investors."

Summary terms and conditions for the new bond issue

Issue Amount	EUR 5 billion
Pricing Date	26 June 2007
Payment Date	03 July 2007
Maturity Date	15 October 2017
Issue/Re-offer Price	99.871%
Annual Coupon	4.75%
Re-offer Spread	mid swap – 10bp
Format	EARN (Eurobond)
Listing	Luxembourg and Paris. The notes are also ECB eligible for Repo transactions