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

the European Sting Milestones

Featured Stings

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

Will Qualcomm avoid Broadcom’s hostile takeover post the 1 bn euro EU antitrust fine?

Draghi joined Macron in telling Germany how Eurozone must be reformed

Plastic Oceans: MEPs back EU ban on polluting throwaway plastics by 2021

The ‘abuse of food relief in Yemen’ must end now

Halt death sentences on children, UN rights expert urge Saudi authorities

Global immunization is having its annual check-up. What can we learn?

As the year closes out, UN political chief talks the art of diplomacy – and crises to watch in 2019.

Ukraine pays the price for lying between Russia and the EU

The EU Commission by serving the banks offers poor support to European mainstream political parties

France sneaks into the Geneva US-Iran talks to claim its business share in Tehran

How to keep our cities cool as temperatures rise

Parliament adopts its position on digital copyright rules

Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine

The Irish Presidency bullies the Parliament over EU budget

Mental health problems costing Europe heavily

Anti-vaccers: does the empty can rattle the most?

Clean energy will do to gas what gas has done to coal

WHO and IFMSA as transcendent pillars for world improvement

The Oslo model: how to prepare your city for the electric-vehicle surge

Is Eurozone preparing to abandon austerity and stagnation?

Lessons from the Global Entrepreneurship Index

EU Parliament: It takes real banks to fight unemployment and recession

EU-India summit: Will the EU manage to sign a free trade agreement with India before Britain?

UK: Crawley group wins European Citizens’ Prize

Multilateralism: The only path to address the world’s troubles, signals Guterres

The EU Parliament sidesteps the real issues about banks, while the US target the Eurozone lenders

Easing funding woes for UN agency assisting Palestine refugees a ‘wise investment for today and the future’

In Tokyo, UN chief expresses full support for US-Japan dialogue with North Korea

A Sting Exclusive, the European Commissioner for Energy Günther Oettinger writes for the Sting on “EU Industry: a major energizer”

The EU Commission predicts a decimated growth in the next years

There’s a global learning crisis and it’s leaving millions without basic skills

European Union disenchanted with Turkey

Trump aims trade offensive solely to China, renews truce with EU

Education expenditure in the EU not hurt much by crisis

UN chemical weapons watchdog adds new powers to assign blame, following attacks

7 key challenges for the future of ASEAN – and how to solve them

European Youth Vlog

EU-Japan trade agreement enters into force

We don’t need to ban plastic. We just need to start using it properly

Change is happening – and young people are leading the way forward

Neelie Kroes at the European Young Innovators Forum: Unconvention 2014

EU-US trade talks go ahead despite Prism and civil rights breach

EU Ambassadors in the EP: a multilateral approach to global challenges needed

Commission: Raising the social issues that can make or break the monetary union

Want a fairer society? This economist says he has the answer

EU decides “in absentia” of civil society

Oh, well, you are wrong, Google responds to the European Commission

Brexit talks: 2nd round fails to bring the EU and the UK closer on key issues

An ECB banker wants to change the European social model

Large parts of the world are growing more fragile. Here are 5 steps to reverse course

ECB steadily continues monetary easing policy as EU economy gains momentum

Can the next financial crisis be avoided?

Russia to cut gas supplies again: can the EU get back to growth without a solid energy market?

The new European Union of banks is ready

Ceasefire holds in Tripoli, but core problems remain, says UN Libya mission chief

Managers’ pay under fire

French election: Will France vote for a reformed or no EU?

Respect for fundamental rights and freedoms key for peaceful polls in DRC – UN mission chief

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