European Investment Bank Issues $1 Billion in Notes

December 5, 2018

On December 5, the European Investment Bank (EIB) issued $1 billion principal amount SOFR-link floating rate notes due 2021. The offering represents the EIB's first floating rate note linked Secured Overnight Financing Rate (SOFR), and the first in the market to compound SOFR, rather than calculating the weighted average over the relevant period. The takedown was from the EIB's U.S. debt shelf registered under Schedule B of the Securities Act. Citigroup and TD Securities acted as underwriters. S&C represented the underwriters in the offering.
SOFR is the daily secured overnight financing rate published by the Federal Reserve Bank of New York, and is intended to be a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. The Federal Reserve Bank of New York reports that SOFR includes all trades in the Broad General Collateral Rate, plus bilateral Treasury repurchase agreement transactions cleared through the delivery-versus-payment service offered by the Fixed Income Clearing Corporation (a subsidiary of DTC).
The EIB is an autonomous public institution established by the Treaty on the Functioning of the European Union. The EIB's capital is subscribed by the member states of the European Union. Operating on a non-profit-making basis, the EIB is required by the Treaty to grant loans and give guarantees for projects which develop the less-developed regions of the EU and for projects which modernize or develop undertakings or develop new activities, or which are of common interest to several member states. In addition, the EIB grants loans and gives guarantees for projects outside the EU. To finance such projects, the EIB uses its own capital resources and recurs to borrowings on capital markets. In 2018, the EIB issued a total of approximately $21 billion in various takedowns under its Schedule B registration statement.
The S&C team in London was led by Kathryn Campbell, along with Evan Simpson and Costanza Posarelli.