The European Investment Bank (EIB) today announced the details of a Lm10 million bond issue. The bonds carry a coupon of 3.8% and mature on 30th March 2009. Interest is payable annually on 30th March, with the first interest payment due on 30th March 2005.
The European Investment Bank (EIB) is the long-term lending institution of the European Union, and the world’s largest multilateral lender and supranational borrower. The task of the EIB is to contribute towards the integration, balanced development and economic and social cohesion of the member states of the EU. The EIB raises substantial volumes of funds through the capital markets by way of bond issues, which it then directs on the most favourable terms towards financing capital projects in accordance with the objectives of the EU.
Although the bulk of EIB loans have been advanced within the EU, lending in EU Acceding and Accession Countries has played an
important and growing role in recent years. The Bank mainly finances public and private sector projects in transport, telecommunications, industry, energy, tourism, as well as health and education.
The EIB is owned by the 15 member states of the European Union. The 4 largest economies in the EU (France, Germany, Italy and the UK) together provide about 71% of the Bank’s subscribed capital. After 1st May 2004, the
10 new member states (including Malta) will automatically become shareholders of the EIB, in proportion to the economic weight of that country with respect to the existing EU.
EIB’s bonds are of the highest credit quality. They are consistently rated AAA by all the major rating agencies.
Since the EIB bond is rated AAA, implying a quasi risk-free bond, the 3.8% coupon being offered is lower than a corresponding 5-year term Malta Government Stock, rated A. In fact, the two MGS issues maturing in 2009 are currently yielding between 4.3% and 4.4% per annum. The lower yield being offered by the EIB reflects its better credit rating than that of the Government of Malta.
Applications for Lm20,000 and over may be submitted at the pre-placement stage, which opens and closes next Friday 5th March 2004. All other applications (minimum of Lm500 per application and in multiples of Lm100) must be submitted during the public offer which opens on Monday 8th March and closes on Friday 12th March 2004 or earlier at the discretion of the EIB.