Rating: Aaa/AAA/AAA
Amount: €500m green bond
Maturity: 13 November 2037
Issue/reoffer price: 97.75
Coupon: 0.5%
Spread at reoffer: mid-swaps minus 10bp; 38.9bp over the 4% January 2037 Bund
Launch date: Wednesday, September 28
Payment date: October 5
Joint books: Bank of America Merrill Lynch, BNP Paribas, Commerzbank, JP Morgan, UniCredit
Borrower’s comment:
There are no green bond benchmarks in euros beyond 2026, so the natural extension was the long end, in a maturity that would match our longest eligible loans. We wanted to complete our curve in all relevant maturities. There was also a technical consideration: rates have dropped, so pushing out to a longer tenor allows us to offer a better yield.
We expect the bond to trade where it priced, because we came flat to the secondary curve and the bond was distributed with genuine impact investors.
We have also taken an important initiative for the market with the publication of a Climate Awareness Bond (CAB) statement with an extensive description of our green bond practice accompanied by an Independent Reasonable Assurance Report from KPMG Luxembourg including an External Review Form.
We asked the lead managers to provide the document to all investors. It was the first time that so comprehensive information could be provided with this level of assurance and the initiative was very well received.
Bookrunners’ comment:
The book is of exceptional quality, with mostly real money investors, and we expect it to trade very nicely. Initial price thoughts were 10bp through swaps area. We priced in line with that at minus 10bp and received orders of €550m. That’s more or less flat to the secondary curve, so it should trade in line with pricing. We circulated the comprehensive statement regarding the EIB’s green bond programme to all the investors. It’s the first time they’ve had such detailed, comprehensive information about how their investments will be used and it was certainly appreciated.
The maturity fit with the borrower’s ALM needs, and allowed us to offer a better yield. In this low rate environment, locking in long term funding is certainly useful.
This is the longest green bond ever.
Geographical distribution
Germany 25%
France 21%
Netherlands 18%
UK 15%
Italy 6%
Spain 5%
Other 10%
Distribution by investor type
Asset managers 38%
Banks 27%
Insurance 17%
Pension funds 10%
Central banks/official institutions 8%
Market appraisal:
“…it’s their longest Climate Awareness Bond, which is interesting to see. I was a bit surprised not to see more French and Dutch investors in the book.”
“…it’s in line with what EIB normally does from a pricing perspective. The CAB bonds trade in line with the Ecoop curve, not the Earn curve, so it’s not surprising it’s gone tight with this. The long end is in good demand so it’s a good deal and I’m sure EIB will want to tap from it.”
“…it was a lucky winning bet. It came more or less flat to the secondary curve, which I’m not sure is the best message to send with the green bond programme.”
