European Investment Bank to borrow €70 billion in 2013

European Investment Bank in Luxembourg

European Investment Bank in Luxembourg

The European Investment Bank (EIB) is one of the long-term lending institutions of the European Union and it is owned by its Member States. It makes long-term finance available for sound investments in the real economy, in order to contribute towards EU policy goals. Its creditworthiness measures almost exactly the degree of trust that financial markets formulate for the European Union in its entirety.In 2012, the EIB was funded with more than the equivalent of €70 billion and plans to borrow another €70bn in 2013. EIB regularly offers bond issues in euro, but it participates also in the capital markets of other major currencies, like the British Pound (GBP).The Bank’s issues and the kind of acceptance they meet in the market are considered as benchmarks.

On Thursday 3 January 2013, the EIB launched its first benchmark bond issue of 2013 with a new 5-year GBP 1bn loan maturing on 15 January 2018. The bond carries a coupon of 1.375% (annual return for the holder) and it was priced at 40 basis points (100 basis points = 1%) over the relevant United Kingdom Treasury bond due on March 2018. The price of a bond is usually negotiated around parity, meaning around the 100% of its nominal value.

If a bond is of high creditworthiness its price exceeds the par and it is sold above 100% of nominal value, analogically reducing its yield for the holder.According to the EIB, the order book for this issue  opened at 8:25 am London time on Thursday, with a minimum deal of no less than GBP 500 million and price guidance based on the  United Kingdom Treasury bond maturing on March 2018 + 40/42 basis points (bps).

The offer was met with strong UK demand from the outset. The book closed at 10:30 am, having reached offers of around GBP 2 billion. It allowed EIB to price a capped deal of GBP 1 billion at a final spread based on the United Kingdom Treasury bond maturing on March 2018 + 40 bps. That is at the narrow end of the initial price guidance. At GBP 1bn, this is the joint largest ever new 5-year GBP issue from EIB. In reality investors accepted a lower yield (United Kingdom Treasury bond maturing on March 2018”+40 basis points), given that EIB was ready to pay an interest rate up to +42 basis points for this loan.

The transaction enjoyed very strong support from UK investors, who took 80% of bonds sold. Bank treasuries were the powerhouse of demand, accounting for 74% of allocations, with solid support coming from central banks and official institutions (16%), fund managers (7%), insurance and pension funds (2%) and private banks (1%).

Geographical composition of demand

As noted above the vast majority of demand for this EIB new bond issue came from UK investors. Then it was Asian buyers who accounted for 15% of the bond, followed by Middle East and Africans with 2%, Europeans (ex. UK) with 2% and others with 1%.

After the conclusion of the transaction Bertrand de Mazières, Director General of Finance at the EIB, said: “The first sterling benchmark in 2013 was well received and emphasizes a continued and widespread market acceptance for the EIB’s strategic issuance approach. The lion’s share of demand originated from UK based investors together with Asian accounts and also capitalised on improved market sentiment towards Europe which builds a solid base for the EIB’s 2013 funding activities.”

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Making money from meeting the SDGs? An overarching approach to sustainable development.

‘Humiliation was the worst’; Holocaust survivor at UN, asks world to act with ‘empathy and compassion’

Monday’s Daily Brief: Earth Day, looking for a solution to Libya crisis, focus on indigenous issues, Security Council on Sri Lanka, a high-level visit to Bangladesh

Do academia and banks favour a new Middle Ages period?

At Ministerial session, UN regional office in Beirut to focus on technology for sustainable development

Twenty days that may remold the future of Europe

The European Parliament double-checks the EU 2014-2020 budget

Crucial medical supplies airlifted to north-east Syria to meet ‘desperate need’

Brexit: Ensuring a smooth transition for car producers and safety on the roads

It’s Time to Disrupt Europe, Digital First

‘Global clarion call’ for youth to shape efforts to forge peace in the most dangerous combat zones

At last a good price for the Greek debt!

This is how much the US-China trade war could cost the world, according to new research

Why we need artists who strive for social change

Your chocolate can help save the planet. Here’s how

MEPs demand Bulgaria’s and Romania’s swift accession to Schengen area

Here’s how China is going green

From a refugee camp to Davos: one Co-Chair’s story

Cancer is a growing global threat and prevention is key, UN study shows

What Keynes can teach us about government debt today

5 things to know about the exploding world of pro gaming

ECB ready to counter the rise of the euro?

Action needed to end deadly clashes between African herders and farmers: UN chief

Climate change: ‘A moral, ethical and economic imperative’ to slow global warming say UN leaders, calling for more action

1 million citizens try to create a new EU institution

In this Tokyo cafe, the waiters are robots operated remotely by people with disabilities

These countries are the most peaceful – in 3 charts

Scores killed in ‘barbaric’ attack on Mali village, UN chief urges restraint, calls for ‘dialogue’ to resolve tensions

New rules to help consumers join forces to seek compensation

These five exercise trends will help society and your health

To improve women’s access to finance, stop asking them for collateral

JADE Testimonial #1: Marcello @ Enlargement

EC v Samsung: A whole year to compile a case

8 things we need to do to tackle humanitarian crises in 2019

Afghanistan: UN condemns blasts that leave 8 dead at cricket stadium

Niger population’s suffering ‘increasing with each passing month’: UN Refugee Agency

EU out to conquer African Union summit

New EU rules to thwart money laundering and terrorist financing

Ferry capsizes near Mosul, UN chief offers solidarity, support ‘as needed’

Deep chasm still divides Athens and Brussels; can Eurozone use the nuclear arm of liquidity against Greece?

Why is the World Health Organisation so much needed?

Cutting CO2 emissions from trucks: MEPs reach deal with Council

New chapters in EU-China trade disputes

These refugee children have danced in the snow for the first time

India is investing more money in solar power than coal for first time

Migration: Better travel safe than sorry

Fighting crime: faster EU-wide exchange of non-EU nationals’ criminal records

China is building 8 new airports a year

Sudan: Amidst deaths, injuries, imprisonments, UNICEF stresses children’s protection ‘at all times’

Greece: The new government of Alexis Tsipras shows its colors

This tiny new grain could save the planet

Artificial Intelligence: These 3 charts show what people really think

Wars have rules: 5 things the UN humanitarian chief wants countries to tackle so human suffering in conflict can be minimized

Businesses, governments and consumers to implement a more climate-friendly approach to #BeatPlasticPollution on World Environment Day 2018

European Commission adopts new list of third countries with weak anti-money laundering and terrorist financing regimes

How the gender commuting gap could be harming women’s careers

Practicing healthcare through a global lens

This tool shows you which cities will flood as ice sheets melt

Humanitarian visas would reduce refugees’ death toll

These are the countries that eat the most meat

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s