The European Investment Bank (‘EIB’) has issued a JPY 5bn Climate Awareness Bond (CAB) in Samurai format. This is EIB’s first CAB denominated in Japanese Yen, and the first ever green bond in the Samurai format in the market. JPY thus became the 8^th currency for EIB CAB issuance.

The European Investment Bank (‘EIB’) has issued a JPY 5bn Climate Awareness Bond (CAB) in Samurai format. This is EIB’s first CAB denominated in Japanese Yen, and the first ever green bond in the Samurai format in the market. JPY thus became the 8^th currency for EIB CAB issuance.

The issue has a coupon of 3% during the first year and is then linked to the JPY/AUD FX rate. It has a final maturity date of 25 March 2039 and can be called by the issuer on an annual basis from 25 March 2024 onwards. The bond was placed with Japanese corporate and institutional investors.

Climate Awareness Bonds raise funds from fixed income investors to support EIB lending for renewable energy and energy efficiency. CABs provide investors with the opportunity to associate their investment with projects contributing to climate action, while enjoying the excellent credit quality of EIB as an issuer.

Lead Manager for the transaction was Daiwa Securities.

Climate Awareness Bonds

The funds raised via Climate Awareness Bonds are earmarked for EIB lending projects within the fields of renewable energy and energy efficiency. These projects include, but are not exclusive to, respectively:

• renewable energy projects such as wind, hydropower, wave, tidal, solar and geothermal production,
• energy efficiency projects such as district heating, cogeneration, building insulation, energy loss reduction in transmission and distribution, and equipment replacement with significant energy efficiency improvements.

EIB’s strict earmarking approach entails the ring-fencing of proceeds in a dedicated liquidity portfolio. Pending disbursements, the sub-portfolio is invested in money market instruments.

The EIB provides transparency on Climate Awareness Bonds through regular reporting via the annual Sustainability Report (formerly Corporate Responsibility Report) and the dedicated Climate Awareness Bond Newsletter.

Since inception, CABs have raised over EUR 4.6bn equivalent in 8 currencies.

Climate Action – a top priority of the EU and EIB

A key instrument of EU public policy, the European Investment Bank is a market leader in the financing of projects tackling climate change worldwide, with EUR 19bn lent in 2013 alone. EIB’s 2014 to 2016 Corporate Operational Plan sets an annual target of over 25% of finance directed to climate action.

Within climate action, the EIB strongly supports renewable energy and energy efficiency, meaningfully contributing to the EU’s climate change and energy sustainability objectives. EIB’s overall lending in these areas in 2013 reached a record EUR 8.6bn, almost double the volume attained in 2012 (EUR 4.4bn). EUR 6.4bn was dedicated to Renewable Energy alone.

Comments on the issue:

Eila Kreivi, Director and Head of Capital Markets Department at EIB, said: “With this first Climate Awareness Bond in Samurai format the EIB responded to demand from Japanese corporate and institutional investors with a socially responsible focus. This year, Climate Awareness Bonds have already raised a record EUR 1.6bn equivalent in 5 currencies – a testimony to the depth and diversity of the investor base in this space.”

Carlos Perezgrovas, Executive Director SSA Origination, at Daiwa Capital Markets Europe Ltd said: “Daiwa is delighted to have worked together with the European Investment Bank on this Climate Awareness Bond Samurai, the first Socially Responsible Investment (SRI) bond in the Samurai market. Renewed interest from institutional investors for structured notes, together with greater awareness of SRI bonds, is allowing this young asset class to expand into the Japanese domestic market.”

Background information:

EIB funding strategy and results

The Bank’s funding strategy combines a consistent and transparent approach with flexibility and innovation, both in terms of product and maturity. In 2014, the Bank plans to borrow EUR 70bn. This is the same as the volume originally targeted for 2013, and similar to the amount of EUR 72bn raised in 2013, which included some prefunding for 2014.

Background information on EIB

The 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, robust liquidity, firm shareholder support, conservative risk management and a sound funding strategy.