FAQ - Capital Markets

What is the EIB's borrowing philosophy?

In view of the EIB’s considerable funding requirement, the Bank aims, on a permanent basis, to accommodate the wishes of institutional and retail investors as to currency, maturity, structure, etc. when it offers new securities. Therefore, the EIB focuses on the issuance of large, liquid benchmarks in the main currencies (EUR, GBP and USD) as well as the offering of structured and tailor-made securities in a wide range of currencies. As in the past, the Bank continues to seek an active role in furthering the development of emerging markets, in particular those of the new Member States and the Accession Countries.

How much does the EIB borrow?

In 2007, the EIB borrowed EUR 55 billion (*) through 236 transactions, raising funds in 23 different currencies, of which 38% was in EUR, 26% in USD, 20% in GBP and the remaining 16% in other currencies (AUD, BGN, CAD, CHF, DKK, HUF, ISK, JPY, NOK, NZD, PLN, RON, RUB, SEK, TRY and ZAR). Four further currencies, BRL, BWP, GHS and MUR, were in synthetic format.

On 31 December 2007, the EIB's outstanding debt amounted to EUR 246 billion.

(*)  Including 'pre-funding' of EUR 77 million completed in 2006 for 2007.

What is the EIB's financial profile?

The EIB is owned and supported by a group of sovereign states. Since 1 January 2007, the shareholders are the 27 Member States of the European Union. With the entry of the 2 new Member States, subscribed capital has increased to EUR 164.8 billion from EUR 163.7 billion. EUR 8.2 billion of the subscribed capital will be paid in over 8 installments, the rest being available for call should the Bank ever need it to meet its obligations on its borrowings.

The statutory lending ceiling is set at 250% of subscribed capital. In 2007, 92% of signed loans were granted within the enlarged EU with a large part benefiting from guarantees from member states or public institutions.

Liquidity is monitored with a view to matching disbursement needs. The consistently earned profits are generally transferred to the reserves and policies and controls are in place to manage risk.

The EIB has been given a AAA rating by major credit rating agencies ever since it was first rated in 1975.

What type of securities does the EIB issue?

EIB bonds span a wide range from large benchmark/reference issues to smaller, often structured issues targeted for retail or specific institutional demand.

With the aim of creating large reference issues with a high degree of liquidity, the EIB has built up in recent years series of benchmark issues all along the yield curves in the main currencies EUR, GBP and USD. Secondary market liquidity is provided by the major investment banks in each market.

These bonds are mainly bought at launch by institutional investors, while the smaller size, plain vanilla issues, which the Bank offers in a wide range of currencies, are often taken up by retail investors.

The specific needs of both retail and institutional investors are catered for through different kinds of structured, tailor-made issues, which include elements like calls, caps and the linking of coupons and redemption amounts to the movements in share indices and currencies.

What are EIB benchmark bonds and structured issues?

Benchmark bonds are large volume issues with standard features such as fixed interest rate coupons and redemption at final maturity (so-called plain vanilla transactions). The Bank has in recent years gradually built up large size issues all across the yield curves in EUR, GBP and USD. Due to their size, secondary market trading in these bond issues is considerable as indicated by the tight bid/offered spreads. Active trading is secured through the obligation of the placing banks to continue to make markets in these bonds. Particular information and price quote pages are attributed to these bonds on the Reuters information system under the names EIBEARN01, EIBGBP01 and EIBUSD01, and under EIB<GO> on Bloomberg.

Structured issues are characterised by unforeseeable coupon and/or redemption amounts (however issues linked to standard interest rate indices like EURIBOR are not considered structured issues). This uncertainty as to the return may result from the linking of the coupon payments and/or the redemption amounts to interest rate and share indices, currencies as well as the inclusion of options such as calls and puts and of cap and floor features. These issues are mainly arranged to meet particular investment needs by retail and institutional investors.

In which currencies, size and maturities are the EIB securities offered?

In 2007 the EIB launched bond issues in 23 different currencies (four of which were in synthetic format). Reflecting the Bank's strategy to offer large, liquid reference issues to investors, the main currencies, USD, EUR and GBP, accounted for 84% of the new issues launched that year.

The size of bond issues mainly vary from EUR 10 million to EUR 5,000 million equivalent , smaller amounts in general being related to retail and tailor made issues for institutional investors while the large amounts are attached to reference issues in EUR, GBP and USD. Additional tranches of an issue are often launched in order to increase the total outstanding of the issue, thus increasing the liquidity; presently the largest issue by the Bank amounts to EUR 7 billion.

Bond maturities range from one year and up. The average maturity on new bond issues in 2007 was 8.5 years.

Commercial paper and other short-term instruments are offered with maturities from one to 364 days.

Where are the EIB securities listed, cleared and settled?

The EIB securities are generally listed on one or more stock exchanges. The EIB Eurobonds are mainly listed on the Luxembourg and/or the London Stock Exchanges. Securities launched on the basis of documentation particular to a country will generally be listed in that country. While the vast majority of issues are listed, private placements might - accommodating the wishes of investors - not be listed on an exchange.

Clearing of the EIB bonds takes place through one or more clearing systems (as specified in the documentation of the particular bond issue) such as Euroclear, Clearstream, CREST and the Depository Trust Company (DTC).

Fiscal and paying agents are major specialised banks.

Where do I find price quotations and find out about new and outstanding issues?

Price quotes on the most liquid and recent issues are shown by professional bond market participants on electronic trading platforms and on the Reuters and Bloomberg information systems. Particular pages are attributed to the largest EUR, GBP and USD issues on the Reuters system (“EIBEARN01”, “EIBGBP01” and “EIBUSD01”), and in Bloomberg (EIB<GO>). Should you not have access to these information systems, please contact your usual intermediary, who will provide you with current prices.

Newspapers also publish price quotes on selected EIB issues from stock exchanges as well as from participants in the market.

New issues are announced on the Reuters and Bloomberg systems and by the financial institutions underwriting these issues. The financial press also often reports the launch and provides details of new issues by the Bank.

What is the tax status of bonds issued by EIB?

This will depend on the laws and regulations of the country where the bondholder is resident for tax purposes. In some countries, EIB bonds may be treated as government bonds; in others they may be treated in the same way as bonds issued by private companies. In some countries, the tax status may vary depending on the currency of issue. For further information, bondholders should consult their own tax authority or an appropriate professional adviser.