New EIB EUR 2bn 10-Year Benchmark Priced At Record Low Levels

• First SSA Issuer in the 10-year EUR segment after the start of the PSPP
• Provides new on-the-run 10-year point on EARNs benchmark curve
• Record low pick up vs. Bund

On Thursday 19th March 2015, the European Investment Bank issued its first new Euro Area Reference Note (EARN) of 2015. The bond was priced at a spread of mid-swaps -30bps, from initial price thoughts of mid-swaps – 30bps area. This equated to a spread at the time of pricing of +5.8bps over the Bund 0.5% due February 2025. 

EIB announced the intention to issue a new 10-year EARN benchmark on Tuesday, 17thMarch, making EIB a first-mover in the 10-year EUR segment after the start of the PSPP. Lead managers started to collect indications of interest on Wednesday, 18th March, at 14:30 CET after the EUR 4bn auction of the DBR 2025. The Initial Price Thoughts were announced at mid-swaps -30bps area. Order books were officially opened on Thursday, 19th March at 09:20 CET, with the price guidance of mid swaps -30bps area. The transaction met with solid demand and books approached EUR 2bn at 11:30 when the spread was fixed at MS -30bps. At 13:15 the deal size was set at EUR 2bn with final pricing at mid-swaps -30bps.

The order-book was driven by bank treasuries and central banks, mainly from European and Asian investors. There was especially strong interest from the U.K. (19%) and France (18%), and Asian accounts represented over a third of the issue’s allocation.

With this issue EIB has raised EUR 22bn or almost 37% of its EUR 60bn funding programme for 2015. Total EARNs outstanding are currently EUR 129.4bn across 25 lines with maturities up to 2037.

Composition of demand for the issue:

Comments on the issue:

Eila Kreivi, Director and Head of Capital Markets Department at the EIB said: “We are testing boundaries with this issue. Our new 10-year euro benchmark provides a record low coupon, and a tight – but fair vis-à-vis secondary market - spread to mid-swaps and to the Bund. With this issue the EIB has completed over a third of its funding program for 2015, raising about EUR 22bn.”

Susan Barron, Managing Director, SSAR Origination at Barclays, said: "Once again, EIB has successfully demonstrated its market leadership role in the long end as the first supranational or agency to issue in 10-years since the PSPP began. With this issue, EIB not only adds a new 10-year EARN benchmark on their own curve but has also been able to successfully issue at record low yields and spread to Germany with only a marginal new issue premium."

Benjamin de Forton, SSA Origination; BNP Paribas: "With this 10-year EARN the EIB has once again shown market leading pricing with the tightest supranational print to Bunds (5.8 bp above DBR 0.5% 15 Feb. 2015) and through mid-swaps (-30 bp). From a coupon perspective, this also dwarfs the lowest previous coupon that EIB has paid in this tenor back in 2013 by 187.5 bp.  An incredibly high quality orderbook and ongoing demand in the secondary market will ensure very solid secondary market performance”.

Valerie Menoret, Director, SSA Origination at Citi: "With this new 10 year EARN, EIB has not only achieved the lowest ever yield for a 10 year SSA benchmark but also the tightest spread to Bunds. With the dramatic tightening we have seen over the last ten days, EIB is one of the very few issuers that could have captured such a high quality book at these yield levels."

Pietro Bianculli, Managing Director, Head of SSA Syndicate at UniCredit said: "With being the first issuer out of the SSA universe that entered the "new QE market" with a new 10-year transaction, EIB once more proved their leadership role in this segment. Furthermore, the extremely low spread, both vs. Swaps and vs. Bunds, underpins the quality of EIB."

For further information please contact:
Carlos Ferreira da Silva: +352 4379 88488

EIB funding strategy and results
The Bank’s funding strategy combines a consistent and transparent approach with flexibility and innovation, both in terms of product and maturity. In 2015, the Bank plans to borrow up to EUR 60bn, similar to the volume achieved in 2014 (EUR 61.6bn raised).

BACKGROUND INFORMATION ON EIB

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. The Bank’s strong credit standing is underpinned by exceptional asset quality, a strong capital base, firm shareholder support, conservative risk management and a sound funding strategy.

Summary Terms and Conditions for the new Bond Issue