Europese Investeringsbank presenteert tweede EARN benchmark 2011 (en)

Met dank overgenomen van Europese Investeringsbank (EIB) i, gepubliceerd op donderdag 10 maart 2011.

The European Investment Bank today priced a new EUR 3 billion benchmark Euro Area Reference Note (EARN) in the 10-year sector. This is EIB’s second EARN benchmark in 2011, following a successful 3-year transaction in January this year.

The issue carries an annual coupon of 3.625% and has a final maturity date of 15th January 2021, thus providing the EIB EUR curve with a new current coupon benchmark in the 10-year sector. The 2021 maturity also fits well in EIB’s redemption profile with a gap in the curve between 2020 and 2024. The bond was priced at a spread of mid-swaps plus 20bps, equating to a spread of +45bps over the DBR 2.5% January 2021.

The transaction was announced on Wednesday 9 March at 4pm London time and the orderbook opened on Thursday 10 March at the initial guidance of MS+20bps area. Despite some volatility in the Euro government space following the Moody’s downgrade of Spain on Thursday morning, the deal attracted robust demand from a wide variety of high quality accounts, with the orderbook closing in excess of EUR 4 billion.

The final distribution reflected the breadth of EIB’s reach in key centres of demand in Europe as well as the high quality of the orderbook with a notable 16% participation from Central Banks and a 13% participation from Asian investors, a strong result given the long maturity.

Composition of demand for the EARN issue:

 

By Country

By Investor Type

Germany 22%

France 15%

UK 14.5%

Benelux 14%

Asia 13%

Scandinavia 9%

Switzerland 7%

Italy 2%

Other 3.5%

Banks 48%

Insurance/Pension Funds 21%

Central Banks/ Off Inst's 16%

Fund/Asset Managers 15%

With this transaction EIB’s funding programme has reached EUR 29 billion year-to-date, against an annual programme of EUR 70-75 billion. Total EUR-denominated benchmark outstandings have reached around EUR 116 billion across 22 EARNs.

Comments on the issue:

Barbara Bargagli-Petrucci, Director, Head of Capital Markets Department at the EIB, said: “This transaction improves the maturity profile of EIB's funding in 2011. It complements our USD exercise of yesterday, raising our liquidity to levels that permit to look forward from a position of strength, whatever the volatility - rekindled by Sovereign downratings this week - and the competing supply. Its size, well below the total of the orderbook, as well as its balanced distribution patterns (both geographically and by investor type) are bound to help the performance of our reference curve and therefore new issuance over time”

Jeremy Shaw, Co-Head of Rates Syndicate, at Barclays Capital, said: “EIB has yet again demonstrated a highly tuned ability to react to constructive issuance windows and launch a successful 10-year EARN transaction. This EUR 3 billion benchmark not only clearly highlights the solid nature of demand for EIB paper at the longer end of the curve but also provides EIB’s broad investor base with an important current coupon reference point at 10-year.”

Pierre Blandin, Global Head of SSA Origination at Credit Agricole CIB, said: “After the 3-year EARN launched at the start of 2011, this new January 2021 bond allows EIB to successfully return to the 10-year sector of the EARN curve for the first time since 2009 and to offer investors a new on-the-run in this key benchmark tenor. EIB was able to capitalize on the very strong demand for top quality credits in an environment of ongoing volatility and uncertainty. In particular the strong central bank participation for a 10-year deal is testimony to the unique appeal of the EIB credit.”

Patricio Bustos-Heppe, Executive Director at DZ BANK, said : “We are very pleased to see that the EIB has been able to print a rock-solid EUR 3 billion EARN transaction with a 10 year maturity in a rather difficult market environment.”

Lars Humble, SSA Syndicate at Goldman Sachs, said “The fact that the EIB attracted more than EUR 4 billion of interest in a very short period of time in a market that continues to suffer from ongoing volatility in the Euro government space confirms the borrower’s leading position as the SSA European benchmark issuer of choice.”

Summary Terms and Conditions for the new Bond Issue

 

Issue amount

EUR 3 billion

Pricing Date

10 March 2011

Payment Date

17 March 2011

Maturity Date

15 January 2021

Issue/Re-offer Price

99.465%

Re-offer Yield

3.692%

Annual Coupon

3.625%

Re-offer Spread

+45bps over the DBR 2.5% January 2021

 

Mid Swaps plus 20bps

Format

EARN

Listing

Luxembourg