The European Investment Bank (EIB), the EU Bank owned by the EU Member States, rated Aaa/AAA/AAA (Moody’s / Standard and Poor’s / Fitch), issued a new EUR 600m Climate Awareness Bond (CAB). The issue carries an annual coupon of 0.5%, has a final maturity date of 15 November 2023 and has been priced in line with the existing EIB ECoop curve at MS-24bp.
The transaction completes EIB’s EUR Green Bond curve with a third reference point in an intermediate maturity and takes the total CAB issuance to EUR 10bn. These two achievements reaffirm EIB’s developmental role and its commitment to spur further sustainable growth of the Green Bond market. These are important objectives of EIB’s activity in the run-up to the UNFCCC Paris Climate Conference (COP 21) in December 2015, and are reflected in the Bank’s Corporate Operational Plan 2015-2017.
Like the other two EUR CABs outstanding, the new issue has been awarded a Sustainability Bond Rating of ‘b+’ from oekom, one of the leading ESG rating agencies worldwide. This is the highest rating so far assigned by this agency to any Green Bond. The bond is EIB’s third CAB distributed in mini-benchmark / ECoop format, which foresees a size of at least EUR 500m and EUR 250m minimum re-openings upon actual demand. The EUR 3bn ECoop CAB due 11/2019 is currently the largest Green Bond outstanding, while the EUR 1.25bn CAB due 2026 is the longest outstanding Green benchmark in the market.
The bond generated strong demand from a range of investors genuinely interested in the socially responsible features of the transaction (e.g. BMO Global Asset Management, Actiam, etc.), particularly from the Netherlands which accounted for 27% of distribution. Asset managers, insurance companies provided over 37% of distribution by investor type while banks and central banks / official institutions accounted for 58% and 5% respectively.
|By Geographical Region||By Investor Type|
|France 28%||Banks 58%|
|Benelux 27%||Asset Managers 32%|
|UK 12%||Central Banks / Official Institutions 5%|
|Nordic 10%||Insurance companies 5%|
|Other Europe 16%|
Renewable energy and energy efficiency – 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. In 2014, the EIB dedicated over EUR 19bn, or 25% of its total lending activity, to climate action. Within this area, the EIB strongly supports Renewable Energy and Energy Efficiency, meaningfully contributing to the EU’s 2020 and 2030 climate policy targets. EIB’s overall lending in these areas in 2014 reached EUR 8.2bn.
Climate Awareness Bonds
CABs, EIB Green Bonds, provide investors with the opportunity to associate their investment with EIB’s lending in the areas of renewable energy and energy efficiency, while enjoying the excellent credit quality of EIB as an issuer.
The funds raised via these issues are earmarked to match actual disbursements to eligible projects. 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 pioneered the Green Bond segment in 2007 and is the largest issuer of Green Bonds to date, with EUR 10bn raised.
In concomitance with the publication of the new version of Green Bond Principles (GBP), the EIB published its latest, 2014 Climate Awareness Bond Newsletter. The Newsletter outlines in detail EIB’s Green Bond practice in relation to the four key areas of the GBP.
The Newsletter also includes EIB’s Green Bond project impact report, the first prepared according to the proposal for a Harmonised Framework for Green Bond Impact Reporting developed jointly by the AfDB, EIB, IBRD and IFC in response to a reecommendation of the 2015 Green Bond Principles.