EIB

The European Investment Bank will borrow €10bn less in 2019 compared to this year, despite an increase in bond redemptions next year, the supranational announced on Thursday.

Since the issuance of a pioneering Climate Awareness Bond (CAB) by the European Investment Bank (EIB) in 2007, the global Green Bond market has expanded at an impressive pace, with total issuance passing the $500bn mark in the third quarter of 2018.

The European Mortgage Federation-European Covered Bond Council (EMF-ECBC) has set out a definition of an energy-efficient mortgage which should enable ‘a quick roll-out’, according to the European Commission.

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The European Investment Bank this week brought its first dollar floating rate note linked to the Secured Overnight Financing Rate (Sofr) — the likely replacement for dollar Libor — and set two landmarks for the fledgling benchmark. But one of those, on the coupon calculation, truly sets it apart from the other Sofr FRNs to come so far. As Craig McGlashan reports, it also creates an intriguing market choice as the financial sector prepares for a world without Libor.

The European Investment Bank changed up the coupon structure for its first floating rate note linked to the Secured Overnight Financing Rate (Sofr) on Wednesday. But some onlooking bankers warned that different coupon structures could be “unhelpful” in the development of the new benchmark.

The African Development Bank issued the first green bond linked to the Secured Overnight Financing Rate (Sofr) on Tuesday. The European Investment Bank will look to extend the Sofr floating rate note curve on Wednesday with an October 2021 issue that will use a different coupon formula to the previous Sofr trades.

Public sector borrowers are gearing themselves for wider spreads and bigger new issue premiums in the euro market in 2019 following the expected end of the European Central Bank’s public sector purchase programme. The bigger and more liquid names will determine the environment for the rest of the market, according to SSA bankers.

Secondary spreads in the euro public sector market have widened heavily across the curve with just over a month to go before the European Central Bank is expected to put an end to its Public Sector Purchase Programme. SSAs are also being affected by the political ructions from Italy, Brexit and the global trade war, said bankers.

Public sector borrowers could look to join the European Bank for Reconstruction and Development in pre-funding for 2019 if the market backdrop — such as volatility in the Italian government bond market — improves, said SSA bankers.

The Province of Alberta pipped the European Investment Bank to the top score of the week in BondMarker, with both issuers printing five year dollar globals.

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