Supranationals - Europe

234 EuroWeek Financing supranationals and agencies

European Investment Bank (EIB)Rating Aaa, AAA, AAA

Bertrand de Mazières Director general, finance directorate

Barbara Bargagli Petrucci Director, capital markets

Peter Munro Investor relations & marketing

Key officials

The European Investment Bank (EIB) was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The task of the bank is to contribute towards the integration, balanced development, and economic and social cohesion of the EU member states.

The EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives. Besides supporting projects in the Member States, its main lending priorities include financing investments in future member states of the EU and EU partner countries.

The EU member states are fully eligible for bank financing operations, without any geographical or sectoral quotas being applied. Under its statute, the bank is authorised to have maximum loans outstanding equivalent to two and a half times its capital.

overview

Source: Markit

bp

3-Au

g-200

9

3-Se

p-200

9

3-Oct-

2009

3-Nov

-200

9

3-Dec

-200

9

3-Jan

-201

0

3-Fe

b-201

0

3-Mar-

2010

3-Ap

r-201

0

3-May

-201

0

3-Ju

n-201

0

3-Ju

l-201

0

3-Au

g-201

0

3-Se

p-201

0

3-Oct-

2010

3-Nov

-201

0

3-Dec

-201

0

3-Jan

-201

1

3-Fe

b-201

1

3-Mar-

2011

-4

-2

0

2

4

6

8

10

12

14

16

asset swaP sPread3.5% eu5Bn aPr 2016

*Forecast. Source: EIB

€ bn

0 10 20 30 40 50 60 70 80 90

2005

2006

2007

2008

2009

2010

20

11*

Gross Bond issuance

Source: EIB

€ bn

Benchmark deals36 Other plain

vanilla16.6

EUR Ecoops (incl FRNs)

11.1

Structured3.3

issuance By tyPe (2010)

Source: EIB

Central bank / official

institution 25%

Corporates / retail / other

9%

Bank 40%

Fund manager / insurance /

pension 26%

investor Base By tyPe (2010)

Source: EIB

Europe 54%

Middle East & Africa 4%

Asia 29%

Americas 13%

investor Base By reGion (2010)

*NOK, SEK, ZAR, RUB, NZD, PLN, HUF. Source: EIB

€ bn

USD23.1

EUR 26.2

GBP 5.6

AUD 4.266

CHF1.182 JPY

1.244

TRY1.384

Other*3.28

issuance By currency (2010)

The shareholders of the European Investment Bank are the 27 member states of the European Union. Each member state’s share in the bank’s capital is based on its economic weight within the European Union (expressed in GDP) at the time of its accession.

ownershiP structure

Supranationals - Europe

Financing supranationals and agencies EuroWeek 235

risk weighting (Basel ii): 0%

Guarantee: EU sovereign shareholders are legally bound to pay callable capital of €221bn on EIB demand, if required to meet financial obligations.

risK weiGhtinG / Guarantee

Source: EIB

€ bn

0 50

100 150 200 250 300 350 400

2005

2006

2007

2008

2009

total assets

Source: EIB

€ bn

0

50

100

150

200

250

2005

2006

2007

2008

2009

total caPital

*NOK, SEK, ZAR, RUB, NZD, PLN, HUF, TRY. Data at February 14, 2011. Source: EIB

€ bn

EUR114.1

GBP46.4

USD80.6

AUD14.826

JPY12.912

CHF7.162

Other* 14.78

outstandinG issuance By currency

rank lead Manager amount $m no of issues

% share

1 JPMorgan 10,233 50 11.6

2 Goldman Sachs 7,023 8 7.96

3 Barclays Capital 6,995 8 7.93

4 HSBC 6,807 22 7.72

5 Deutsche Bank 6,686 57 7.58

6 Morgan Stanley 5,889 8 6.68

7 UBS 5,580 14 6.32

8RBC Capital Markets

4,913 39 5.57

9 Credit Agricole CIB 3,645 10 4.13

10Bank of America Merrill Lynch

3,150 4 3.57

subtotal 60,920 161 69.05

total 88,222 251 100

Source: Dealogic (March 16, 2010 to March 15, 2011)

toP BooKrunners

Pricing date March 10, 2011

value Eu3bn

Maturity date January 15, 2021

coupon 3.625%

spread to benchmark 45bp over Bunds

Bookrunners Barclays Capital, Credit Agricole CIB, DZ Bank, Goldman Sachs

Pricing date March 9, 2011

value $3.5bn

Maturity date May 16, 2016

coupon 2.5%

spread to swaps 7bp

Bookrunners Goldman Sachs, Morgan Stanley, UBS

Pricing date January 21, 2011

value £300m

Maturity date December 7, 2015

coupon 3%

Bookrunners JPMorgan, RBC

Source: Dealogic

recent deals

standard & Poor’s

AAA, stable outlook

strengths•Strongassetqualitycomparedwithother

multilateral lending institutions•Expectedcontinuingsupportfromcommittedand

highly creditworthy shareholders•Relativelyhighcapitaladequacyratio

weaknesses•Highindividualcountryloanexposure•Highleveragerelativetoshareholders’equity

The stable outlook reflects S&P’s expectations that the quality of EIB’s loans and other assets will remain high, that the key role EIB plays within the financial arrangements of the EU will continue, and that EU member countries, particularly EIB’s largest shareholders and largest countries of operations will retain high credit ratings and remain willing and able to provide support if necessary. In S&P’s opinion, it is possible that EIB will continue to increase its leverage, resulting in a modest further decline in its Basel II ratios.

Key recent ratinG aGency coMMentary

fitch

AAA, outlook stable

The ratings reflect the strong support the European Investment Bank derives from European Union member states, its strong capitalisation and low exposure to credit risk. EIB’s capital is shared among the 27 EU member countries. Like other multilateral development banks (MDBs), only a fraction (5%) of subscribed capital is paid-in; the rest may be called if needed. In view of the shareholders’ credit standing (with an average rating of AA+ at end-2009) and of EIB’s key role as the financing arm of the EU, Fitch considers support would be provided if necessary. The payment of called capital is an obligation under EU treaty. However, ongoing public finance problems in some EU countries could prompt doubts over the medium term as to the capacity of some member states to respond to a potential capital call.

Key recent ratinG aGency coMMentary