EIB Climate Awareness Bond reaches record €2bn

The €500m tap, driven by first-time buyers of CABs, brings total issuance of the green instrument to €4.3bn.

The European Investment Bank (EIB) has priced a €500 million tap of its euro-denominated Climate Awareness Bond (CAB) due November 2019, the largest green bond outstanding in any currency.

The tap, which is the bond’s fourth and largest, carries a coupon of 1.375 percent. It is expected to price 4 basis points (bps) tighter than the original tranche issued on 11 July 2013, and builds the bond to a record total size of €2 billion.

The order book shows a geographical split largely biased towards European investors, which make up for 90 percent of the sales. Asia and the Americas, meanwhile, accounted for 8 percent and 2 percent respectively.

Banks, at 68 percent of the order book, ranked first among the buyers, while fund managers and central banks followed (at 14 percent). Corporates represented only a small minority of bond orders (4 percent).

This CAB is the first to be distributed in Eurocooperation (Ecoop) format, which aims to deepen collaboration between co-operative lenders and savings banks. More than €60 billion of ECoops are currently outstanding, which the EIB says provides a transparent reference for new issue pricing. The bank reckons this helped double the minimum tap amount on the November 2019 CAB issuance, for instance.

CABs raise funds from fixed-income investors to support EIB lending for renewable energy and energy efficiency ventures. They provide investors with the opportunity to channel funds towards projects contributing to climate action, while benefitting from the credit quality of EIB as an issuer.

“Building EIB’s Climate Awareness Bond to a size of €2 billion is a further milestone for the green bond markets. By establishing such a deep and liquid benchmark, EIB has attracted significant new investors to the financing of climate friendly assets,” said Philip Brown, head of public sector origination at Citi, one of the lead managers for the transaction.

Launched by the EIB in 2007, CABs have raised €4.2 billion since inception.

The bank’s total lending to climate change and energy sustainability schemes reached €6.6 billion in 2013, almost double the volume lent in 2012. Renewables formed the bulk of the elected projects, with €6.4 billion dedicated to the sector alone.