European Investment Bank — EIB
Rating: Aaa/AAA/AAA
Amount: $3bn global
Maturity: 26 October, 2026
Issue/reoffer price: 99.397
Coupon: 0.75%
Spread at reoffer: mid-swaps minus 1bp; 9.575bp over the July 2026 US Treasury
Launch Date: Tuesday, August 24
Payment Date: September 1
Joint books: Bank of America, BMO Capital Markets, Citi
Borrower’s comment:
That summer markets are absolutely moribund was a cliché that ran out of road quite some time ago. Moreover, working behaviour has substantially altered since the early days of the pandemic. Besides we are well into the second half of August and as such there was no concern on our part to utilise this window for issuance.
The substantial fall in Treasury yields over the second quarter seemed to have bedded down and the SSA market has been fairly stable in swap terms. We didn’t see executing a trade just prior to Jackson Hole as a major risk on this occasion. We weren’t particularly concerned about ending up sub-Libor, if that’s where the book took us, as it is more of a psychological barrier than a practical one. And, in any event, high grade paper has been trading sub-Libor for a while now. Add to that a dearth of dollar supply, and we were quite convinced of a reasonably receptive outcome. The main reference point was the $5bn, March 2026 line we concluded in January and we eventually priced 2bp through that.
The fact we got our largest ever order book for a dollar benchmark validated our views and choices.
We’ve now completed 82% of our funding programme of €60bn that was announced late last year.
Bookrunners’ comment:
We’re seeing a very orderly and supportive market. Getting the Treasury spread to single digits wasn’t a concern for us. We’ve seen that secondary trading levels have been in single digits for a while. It does put a bit of a limit on secondary performance, but even that has been impressive.
The bond was trading around 6.75bp over Treasuries on Wednesday, and with the new five year benchmark, the rolldown was worth another 1.25bp, so it’s at 5.5bp on Thursday.
It’s a record order book, which is a fantastic achievement at these levels. Clearly the psychological barrier at mid-swaps flat has diminished. We had some accounts posturing about dropping out below Libor flat, but only one or two did. An impressive amount stuck with it.
It helped that this may well be EIB’s last dollar benchmark of the year, and there’s been a big gap without much supply.
Geographical distribution
EMEA 38%
Americas 31%
Asia 31%
Distribution by investor type
Fund managers 48%
Central banks/official institutions 28%
Bank treasuries 24%
Market appraisal:
“… the book is enormous showing that there is definitely pent-up demand in dollars.”
“… an absolutely fantastic result. A real blowout.”
“… it’s given other borrowers confidence to follow suit. It’s shown that, even though the Treasury spread is low and they went through Libor, investors believe there’s value at these prices.”
