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EIB's first Climate Awareness Bond in CHF is also first of 2014

EIB's first Climate Awareness Bond in CHF is also first of 2014

  •  Release date: 10 January 2014
  •  Reference: 2014-005-EN

On 8 January, the European Investment Bank („EIB‟) priced a new CHF 350 million Climate Awareness Bond (CAB). The issue carries an annual coupon of 1.625% and has a final maturity date of 4 February 2025. This is EIB’s first CAB transaction of the year, and the first ever  CHF-denominated  Climate  Awareness  Bond.  The  issue  was  placed  with  Swiss investors.

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

Lead Managers for the transaction were Barclays, Credit Suisse and Deutsche Bank.

Climate Action – a top priority of the EU and EIB

As the EU bank, the European Investment Bank applies a robust, comprehensive approach to climate action, in support of EU policy and its role as a global leader in this field. The EIB is among the largest financiers of projects to tackle climate change, having provided over EUR 13bn worldwide in 2012 alone. EIB‟s 2013 to 2015 Corporate Operational Plan sets an annual target of over 25% of finance directed to climate action.

Within its climate action financing framework the Bank strongly supports energy efficiency and renewable energy investments. The EIB thus contributes to the EU‟s climate change and energy sustainability objectives which foresee that by 2020, 20% of EU‟s  overall energy consumption should be met from renewable energy sources and energy efficiency should increase by 20%.

EIB's lending for renewable energy and energy efficiency in 2012 reached EUR 3.3bn and 1.1bn, respectively.

Climate Awareness Bonds

In 2007, the EIB was the first SSA borrower to issue an environmental-themed bond – the Climate Awareness Bond. Since inception, CABs have raised EUR 3.4bn equivalent. 2013 was a record year for CAB issuance – the EIB issued its largest annual volume ever, EUR 1.4bn.

The funds raised via Climate Awareness Bonds are earmarked for disbursements to 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  andgeothermal 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.

With its first CAB issue back in 2007, the EIB pioneered a strict earmarking approach. This entails the ring-fencing of proceeds in a dedicated liquidity portfolio, with subsequent disbursement   restricted   to   eligible   projects   efficiency. Pending   disbursements,   the subportfolio is invested in money market instruments.

The EIB provides transparency on the destination of CAB proceeds through regular reporting via the annual Corporate Responsibility report and the dedicated Climate Awareness Bond Newsletter.

Comments on the issue:

Bertrand de Mazières, Director General of Finance at EIB, said: “Following a record year for Climate Awareness Bond issuance, this first CAB of 2014 underscores EIB’s continued commitment to the green bond market. Since 2007, CABs have raised EUR 3.4 billion equivalent in seven currencies. Almost 50% of the issue was placed with investors committed to socially responsible investment. This is EIB’s largest CHF-denominated transaction at

launch since 2009.

Charlie Berman, Chairman of DCM EMEA at Barclays, said: “This inaugural Swiss Franc denominated Climate Awareness Bond (CAB) issue further highlights the continued growth in demand from investors for Socially Responsible instruments in their portfolios and EIB’s ability to structure and issue securities which meet the needs of investors whilst minimising its own funding costs. EIB has been a pioneer of the CAB asset class and continues to demonstrate its commitment and leadership in this sector having previously issued CAB benchmarks in currencies including Euros and Swedish Krona.”

Hans-Ulrich Meister, Head Private Banking & Wealth Management and Chief Executive Officer, Region Switzerland, Credit Suisse said: “As a financial services provider, we can make a contribution toward environmental protection by offering our clients a broad range of sustainable products and services. Introducing the Climate Awareness Bonds of EIB to the Swiss Franc capital markets reinforces Credit Suisse’s commitment to sustainability and climate change. The offering will give the opportunity to Swiss Franc investors focusing on socially responsible investments to remain in their home currency in a SIX listed and liquid instrument under Swiss law while benefiting from the high credit ratings of Aaa/AAA/AAA offered on EIB bonds.”

Denis Vucina, Head of CHF Syndicate at Deutsche Bank, said: "EIB printed its inaugural, highly successful Climate Awareness Bond in Swiss Francs. EIB is at the forefront of the development of this new approach and this transaction further validates their long-standing commitment to undertake socially responsible funding and investment projects. ”

Summary Terms and Conditions for Bond Issuance

Issue Amount

CHF 350m

Pricing Date

8 January 2014

Payment Date

4 February 2014

Maturity Date

4 February 2025

Issue Price

100.338

Coupon

1.625%

Re-offer spread

Mid swaps + 1bp

Format:

Stand-alone

Listing

Six

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.



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