One of the world’s main financers of climate action
The European Investment Bank (EIB) is the lending arm of the European Union and the biggest multilateral financial institution in the world. Since its establishment in 1958, the EU bank has invested over one trillion euros, focusing on the following areas: climate and environment, development, innovation and skills, small and medium-sized businesses, infrastructure and cohesion.
In 2007, the EIB issued its inaugural Climate Awareness Bond (CAB), the world’s first green bond. The EIB allocates the funds exclusively to CAB-eligible projects contributing substantially to climate change mitigation, and reports on both allocated projects and climate impact.
In November 2020, the EIB Board of Directors approved the Climate Bank Roadmap 2021-2025 (CBR), which sets out in detail how the EIB Group aims to support the objectives of the European Green Deal. Among other things, the EIB Group plans to gradually increase the share of green financing, which means financing dedicated to climate action and environmental sustainability, to exceed 50% of new annual operations by 2025. The CBR further states that the EIB intends to align its tracking methodology for green finance with the EU Taxonomy and gradually align CABs and Sustainability Awareness Bonds (SABs) with the proposed EU Green Bond Standard as retained and over time amended by the European Commission.
7-times oversubscription highlights EIB’s attraction in sustainable finance market
Following its November-27 CAB issued in the Euro market in December 2021 and its inaugural Sterling SAB in October last year, with NatWest acting as Lead Manager in both transactions, the EIB turned again to the NatWest team to support as Joint Bookrunner for a new €1billion CAB due 15 November 2029.
Indications of interest (IOIs) quickly grew to around €4 billion when books opened. After tightening the spread, orders still continued to grow, reaching a volume in excess of €7.5 billion.
The EIB allocates CAB-proceeds to activities contributing substantially to climate change mitigation in line with evolving EU sustainable finance legislation, including the EU Taxonomy Regulation. CAB-eligible projects are in the following areas: renewable energy; energy efficiency; electric rail infrastructure, vehicles and other electric public land transport vehicles; research, development and deployment of innovative low carbon technologies. EIB’s strategy of early and stepwise application of the EU Taxonomy and EU Green Bond Standard is detailed in the CAB Framework 2020, which was published in September 2021.
Year-to-date, the EIB has raised around €3.5bn in sustainability funding format (CAB and SAB) across Euro, Australian Dollars and Canadian Dollars. EIB Climate Awareness Bonds have enjoyed a strong standing over the last 15 years.
EIB’s comments on the transaction
Eila Kreivi, departing Head of Capital Markets and Chief Sustainable Finance Advisor at EIB, said: “My decade-long tenure at the helm of EIB’s Capital Markets department has seen green bonds transform from niche into mainstream, and acquire an increasingly important role in both markets and environmental policy. The EIB has been on the forefront of this development and will continue to support the green bond segment in quantity and quality, in line with evolving EU legislation on sustainable finance.”
Eric Lamarcq, new Head of Capital Markets at EIB: “2022 marks the 15th anniversary of the Climate Awareness Bond programme. Worthy of the occasion, sustainability funding has been off to a strong start this year, providing sustainable investors with a product they like. The reception for our CAB is a testimony to the value these investors affix to EIB’s approach in the green bond segment.”
Caroline Haas, Head of Climate and ESG Capital Markets, NatWest, said: “We’re delighted to have been able to support the EIB again with their Climate Awareness Bond after working together last year for their debut Sustainability Awareness Bond in the Sterling market in October and their CAB EUR Nov-27 bond issued in December. This issuance reflects NatWest’s commitment and focus to support sustainable development as well as advancing the sustainable finance market.”
Kerr Finlayson, Head of Frequent Borrower Group Syndicate, NatWest, added: “Yet again, the investor demand for this issuance highlights the compelling sustainability credentials of the EIB and the climate mitigation and sustainability projects the bank supports financially. At NatWest we believe we have the duty to play a leading role in the transition towards a low-carbon and fairer society, and this transaction is another example of our purpose in action.”
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