Case study

EIB Climate Awareness Bond attracts more than €30bn in orders

10 Feb 2023 . 3 min read

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[1]. Since its establishment in 1958, the EU bank has invested over €1 trillion[2], 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. Proceeds from Climate Awareness Bonds are allocated to EIB’s lending to activities contributing substantially to climate change mitigation.

The EIB’s Climate Bank Roadmap 2021-2025 (CBR) sets out how the bank aims to support the objectives of the European Green Deal. Among other objectives, the EIB plans to gradually increase the share of green financing – 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.

Investor appetite soars for EIB’s second CAB EARN in 2023

Planning to issue a new Climate Awareness Bond under its EARN (Euro-Area Reference Note) programme – following a €5 billion 10-year conventional benchmark in January – the EIB asked NatWest to support the transaction in the role as Joint Bookrunner. NatWest has consistently been involved in the EIB’s Climate Awareness and Sustainability Awareness Bond programmes, having previously acted as Joint Lead Manager for CAB issuances in January 2022 and December 2021, as well as for the inaugural CAB in EARN format in May last year.

Announcing a new benchmark 5-year CAB in EARN format to the market, investors rushed to put in orders when books opened, resulting in a first peak at €20 billion. Despite price tightening, investor support continued to grow, totalling more than €30.5 billion when books closed for the bond, which will pay an annual coupon of 2.750%. At a final issuance size of €5bn, this transaction marked the largest Climate Awareness Bond for the EIB to date.

Over 270 investors participated in the transaction, with 50% of the accounts representing ESG investors. Investors from Asia took over 36% of the placement, followed by investors from the UK (31%) and Germany (14%). Looking at investor type, with 73%, banks and central banks took the majority.

With over €21 billion raised year-to-date, the EIB has now completed ~47% of its 2023 funding programme.

Accelerating green transition by helping customers access green finance

Eric Lamarcq, Deputy Director General – Finance, Global Head of Treasury and Capital Markets at the EIB commented: “We are very pleased to have received such strong investor support for our second Climate Awareness EARN in 2023. This strong demand is a testimony to the value of EIB’s efforts to facilitate sustainable investment with transparency, accountability, reliability and comparability.”

Damien Carde, Head of Frequent Borrower Group DCM, NatWest, said: “We’re delighted to have been able to support the EIB again, and we congratulate our customer on this record order book of over €30 billion. This transaction is also an example of teams within NatWest coming together to bring the best of the whole bank to our customers so we can deliver the best outcome for them. We are conscious that the more we help customers, such as the EIB, to meet their sustainability aspirations, the more we at NatWest can help to accelerate the transition to a net zero economy.”

[1] Source: EIB who we are

[2] Source: EIB at a glance

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