EIB Launches New Swedish Krona Climate Awareness Bonds
Today the European Investment Bank (EIB), the long-term lending arm of the European Union (EU) announced completion of a new 7-year SEK (Swedish Krona) 1bn Climate Awareness Bond (CAB). This is EIB’s first new CAB line in 2012. Other CAB issuance this year comprises a tap in February for SEK 700m (residual maturity 3-years).
This new Climate Awareness Bond issue offers the opportunity for investors to finance projects involving climate protection, while enjoying an attractive spread over the relevant Swedish government bond and swaps, combined with high credit quality.
The funds raised via Climate Awareness Bonds are used for disbursement to projects financed by EIB within fields of renewable energy and energy efficiency. Such financing forms part of the core objectives of the EIB, supporting European climate policy and its 2020 targets. EIB lending for renewable energy and energy efficiency has grown over the last few years to reach EUR 7bn in 2011.
Demand for the issue was dominated by Nordic investors, led by pension funds and fund managers.
Joint bookrunners for the transaction are Skandinaviska Enskilda Banken AB (publ) (“SEB”) and Deutsche Bank.
Comments on the issue:
Bertrand de Mazières, Director General of Finance, at the EIB, said: “Investor support for EIB Climate Awareness Bonds has focused on the SEK market so far this year. The SEK market has strong tradition in this area, accounting for over a quarter of the EUR 1.55bn of Climate Awareness Bonds launched since 2007.”
Christopher Flensborg, Head of Sustainable Products and Product Development at SEB said: "It is with great pleasure we now introduce EIB to our investors and see this as an important milestone in our common efforts to establish a wide-ranging Climate/Green Bond Market. The demand we see is both a reflection of the attractive spread of EIB to Swedish Government Bonds as well as of the request from our Investors to provide credible Climate related mainstream products. We continue to see broader interest and warmly welcome the new Climate Bond investors SBAB, Apotekets Pensionsstiftelse and Korea Investment Corporation”.
Jan Wipplinger, co-head of Non Core Currency Bonds at Deutsche Bank, said: “EIB capitalised on demand from a broad range of international and domestic investors to issue this very successful deal. We had been monitoring the market for some time and chose this as the optimum time to issue, and as such EIB was able to establish a new Climate Awareness benchmark bond on the SEK curve. We were particularly pleased with the tremendous response this issue received from a diverse group of investors, which is testament to the appeal of EIB as an issuer and the interest generated by a Climate Awareness offering”.
Summary Terms and Conditions for the new bond issue:
Notes to Editors:
On Climate Awareness Bonds (CABs)
The proceeds of EIB CABs can include, but are not restricted to:
renewable energy projects such as wind, hydro, solar and geothermal energy production; and
energy efficiency projects such as district heating, co-generation, building insulation, energy loss reduction in transmission and distribution and equipment replacement with energy efficiency gains of 20% or more.
Pending disbursement, the proceeds are kept in a separate sub-portfolio of EIB’s treasury and are invested in money market instruments.
EIB provides transparency on the Climate Awareness Bonds through its annual reporting and a periodical investor newsletter.
EIB Funding Progress
Year to date, EIB has raised over EUR 37.9 billion or 63% of its programme target of EUR 60 billion in 2012 (as of April 13).
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.