• Demand driven by Socially Responsible investors out of UK
• CAB issuance year to-date driven to a record EUR 2.2bn

On March 26, the European Investment Bank (‘EIB’) priced its first ever GBP-denominated Climate Awareness Bond (CAB). The issue carries an annual coupon of 2.250% and has a final maturity date of 7 March 2020. At GBP 500m, it is EIB’s largest CAB transaction this year. It was priced at G+30bp in line with the original guidance.

• Demand driven by Socially Responsible investors out of UK
• CAB issuance year to-date driven to a record EUR 2.2bn

On March 26, the European Investment Bank (‘EIB’) priced its first ever GBP-denominated Climate Awareness Bond (CAB). The issue carries an annual coupon of 2.250% and has a final maturity date of 7 March 2020. At GBP 500m, it is EIB’s largest CAB transaction this year. It was priced at G+30bp in line with the original guidance.

The transaction was driven by investors interested in its socially responsible features, mainly out of the UK. The issue was driven by major bank treasuries, some of which have recently established dedicated Socially Responsible portfolios.

Lead Managers for the transaction were Barclays, Deutsche Bank, HSBC, Royal Bank of Scotland and Scotiabank.

Comments on the issue:

Eila Kreivi, Director and Head of Capital Markets Department at the EIB, said: “Today’s transaction was driven by the emergence of socially responsible portfolios among large mainstream investors. This has enabled EIB’s first GBP green bond to be issued in liquid size. EIB CAB issuance so far this year – EUR 2.2bn - considerably exceeds last year’s volume of EUR 1.4bn, illustrating the growing momentum in this market. Cumulative CAB issuance has reached over EUR 5bn equivalent.”

Susan Barron, Managing Director, SSAR Origination at Barclays, said: “This highly successful inaugural Sterling denominated Climate Awareness Bond (CAB) issue is a further testament to EIB’s ability to be at the forefront of the development of this new product, and highlights the continued growth in demand from investors for Socially Responsible securities in their portfolios.”

Adrien De Naurois, Co-Head European SSA Syndicate at Deutsche Bank, said: “The EIB's debut and oversubscribed GBP Climate Awareness Bond has expanded its already diverse and long established investor base. Deutsche Bank was honoured to partner with EIB on this landmark transaction, and looks forward to further expansion of the CAB franchise.”

Ulrik Ross, Global Head of Public Sector Capital Markets at HSBC, said: “EIB has yet again shown itself to be at the forefront of the fight against climate change with the inaugural Sterling Climate Awareness Bond from a Public Sector issuer. This transaction also came on the back of EIB's highly successful Climate Awareness Bond and environmental briefing in London in December 2013. The size of the transaction highlights the increasing support Climate Awareness Bonds are generating in different currency markets around the world. The leadership EIB continues to display in this area is a clear indication of the institution’s commitment to the market and to combating climate change.”

Damien Carde, Managing Director, Head of FBG DCM at RBS, said: "This inaugural Sterling Climate Awareness Bond from EIB is another highlight of their leading role in the promotion of this new capital markets instrument, having successfully established the Climate Awareness bond in the Euro market.”

Cesare Roselli, Head of Credit Capital Markets Europe at Scotiabank, said: “We are proud to have been part of this inaugural transaction through which EIB has expanded its Climate Awareness Bond concept to a new currency, and reinforced its leadership in the GBP SSA sector.”

BACKGROUND INFORMATION

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 5bn equivalent in 9 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.

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 similar to the amount of EUR 72bn raised in 2013.

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.