EIB issues new SEK Climate Awareness Bond

Posted on 16, November 2012 by | This entry was posted in Business, Environment, European Union, Financial, Government, Investment, Sweden. Bookmark the permalink.

16-11-2012 — /europawire.eu/ — The European Investment Bank (EIB), the long-term lending arm of the European Union, announced the completion of a new SEK (Swedish Krona) 750m Climate Awareness Bond (CAB) due November 2023. The transaction is the second new CAB line launched by the EIB in 2012. In the year to-date, Climate Awareness Bonds have raised the equivalent of EUR 350m through 4 SEK-denominated issues.

EIB CABs provide investors with the opportunity to finance projects contributing to climate protection, while enjoying an attractive spread over the relevant Swedish government bond, combined with high credit quality. The funds raised via Climate Awareness Bonds are used for disbursement to projects financed by EIB within fields of renewable energy and energy efficiency. Such financing lies at the heart of the EIB’s energy investment and contributes to making Europe’s energy supplies more sustainable, competitive and secure. EIB lending for renewable energy and energy efficiency has grown over the last few years to reach EUR 7bn in 2011.

The transaction was marked by strong interest from Scandinavian investors (taking over 50% the issue), with Asian and other European accounts also providing significant demand. Fund managers and bank treasuries dominated the orderbook.

Investor allocation:

By Geographical Region By Investor Type
Scandinavia: 51% Fund Managers 54%
Asia: 27% Bank Treasuries 41%
Europe ex-Scandinavia: 22% Retail/Private Banks: 5%

Joint bookrunners for the transaction were Danske Bank A/S and HSBC.

Comments on the issue:

Bertrand de Mazières, Director General of Finance, at the EIB, said: “This is EIB’s second successful SEK-denominated CAB in 2012. The issue underscores EIB’s responsive approach in providing investors with credible climate related products. Capitalising on demand from a wide range of international and domestic investors, EIB has established a new benchmark bond on its SEK curve at an attractive spread over the Swedish government bond with the same maturity.”

Laurits Engstrom, Global Head of Local Currency Syndicate at Danske Bank, said “We are starting to see more and more focus from domestic as well as international investors on climate friendly offerings. Investors are establishing a firm standpoint and saying yes to green! Besides the obvious appeal of the climate awareness offering the current spread between EIB and the underlying government bond is still considered attractive by many investors, so the recent 11y Swedish government bond introduced in October provided a natural reference point for us.”

Nils Bachmann Hansen, Local Currency Syndicate at HSBC, said: “With this 11 year SEK print, the EIB impressed by both successfully extending its SEK Climate Awareness Bond curve and by creating a complement to the very recent SGB #1057. The initial demand came out of the Asian hemisphere. However, the bond saw a tremendous response from a diverse group of investors, with Scandinavian accounts taking the lion’s share of the issue. This truly was a testament to EIB’s broad appeal and the increasing interest in Social Responsible Investments.”

Summary Terms and Conditions for the new bond issue:
Issue Amount SEK 750m
Pricing Date 31 October 2012
Payment Date 13 November 2012
Maturity Date 13 November 2023
Issue Price 99.137%
Coupon 2.750%
Re-offer Spread SEK MS + 71bps orSGB 1.50% due 13 Nov 2023 (SGD #1057) + 115bps
Format Under the EIB’s Debt Issuance Programme
Listing Luxembourg

Notes to Editors:

Climate Awareness Bonds (CABs)

Proceeds from the Climate Awareness Bond issues are earmarked for disbursement to EIB lending projects within the fields of renewable energy and energy efficiency, which include, but are not limited to:

  • renewable energy projects such as wind, hydro, solar and geothermal energy production; and
  • energy efficiency projects such as district heating, co-generation, building insulation, energy loss reduction in transmission and distribution and equipment replacement.

Pending disbursement, the proceeds are kept in a separate sub-portfolio of EIB’s treasury and are invested in money market instruments.

EIB provides transparency on the Climate Awareness Bonds through its annual reporting and a periodical investor newsletter.

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.

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