1. a perspective from the Fixed Income Markets
Debt IR,
a perspective from the Fixed Income Markets
Lourdes Rodríguez, IRO, European Investment Bank
November 2005

2. EIB as an issuer: characteristics
Not listed => Fixed income securities are the only access to capital markets
Shareholders: EU Member States
AAA rating
Large issuance volume: around EUR 50bn
Regularity: among most frequent issuers
Diversity: in terms of products and currencies (15 used in 2004) 2

3. Over 10 types, many variations
Summarising complex issuance at EIB
2004
Volume
EUR 50 bn
Nr of issues
282
Nr of currencies 15
Core currencies (EUR, GBP, USD)
90%
Structured
20%
Types of structure
Over 10 types, many variations
In perspective - most frequent issuer in public international market according to IFR (‘Top 250’ 2005)
The challenge – tailoring information to different currency / product market segments, as well as differing investor needs 3

4. The value of a debt security is “subjective”
Why do we communicate?
The value of a debt security is “subjective”
Value of debt securities is determined by
macroeconomic factors, such as interest rates
bond characteristics (coupon, yield, “spreads”, seniority, …)
the credit standing of the issuer
existing or anticipated supply of “fungible” debt securities
rating / characteristics and positioning of the issuer
Investment Grade Sovereigns
Investment Grade Corporate Debt
High Yield Corporate Debt
Information on the issuer
Less important!
Important!
Very important! 4

5. Differentiation beyond the rating
Why do we communicate?
Differentiation beyond the rating
Rating
“Sector”
Issuer
Bond
ASW
AAA
supra
IADB
5.5% 01/10 -8
EIB
4% 04/09
-11
agency
KfW
3.5% 04/09
Freddie Mac
3.75% 07/09 +2
sovereign
Spain
3.6% 01/09
Finland
5% 04/09
-12
Differentiation within rating categories is visible in the variation of spreads: credit differentiation is one factor
This also applies among AAA sovereigns and sovereign surrogates such as EIB
Credit story identifies credit strengths, relative to peers
Therefore appropriate emphasis in Communications is required to duly explain differences
Source: Market, May 2005 5

6. Organisational issues
Who communicates?
Organisational issues
Structuring the team
Importance of investment banks / dealers in a relatively dealer-driven market
However, effective IR activity enables better leveraging of dealers in investor communication
Complex and high frequency international issuance programs lend themselves to use of sizeable in-house teams with specialist origination and IR executives
This contrasts with the traditional Treasury led operation 6

7. Adapting to the market Diversity of debt products
How do we communicate?
Adapting to the market
Diversity of debt products
Equity: one “brand”, one product
Debt: one “brand”, multiple products
Information on the array of products available
Accessibility to listings of outstanding issues and its characteristics
Documentation:
Accessible (before and after issuance)
Clarity of the information
Is it up to the standards required by our investor base? 7

8. How do we communicate?
Adapting to the market
Different content emphasis – reflects audience needs
Equity: shareholder value story, sectoral and market cap factors
Debt: credit story / market segmentation, issuance strategy, product market specifics
Trading & transparency differentials
Equity:
Exchange / electronic trading leads –> transparency benefits
Accessible for retail, strong direct participation
Debt:
Electronic platforms important for highly liquid benchmarks
But, dealer-provided liquidity is central
Otherwise strong OTC culture / poor transparency
Relatively large trades / low frequency
Less direct access for retail -> cost issues
Implication: greater demand for information from debt issuer 8

9. How do we communicate?
Adapting to the market
IR tools similar than in Equity IR, except in investor data
Prevalence of bearer securities reduces debtholder visibility
Cost for debtholder ID across multiple bonds can be punitive, (which reinforces the importance internal data warehouses)
Integrated data/CRM systems, which allow for the diversity and complexity of the debt securities, not offered by large providers
In terms of consultancy/outsourcing 9

10. Focus on relevant credit strengths
What do we communicate?
Focus on relevant credit strengths
EIB issuer category: sovereign class : “Consolidated European Sovereign Issuer”
Points of differentiation include:
Pan-European exposure “The Way to buy Europe”
Risk diversification via ownership structure: 25 Member States of the EU
Credit quality: Top “AAA”
Exceptional asset quality
Strong shareholders’ support – EU members States
Minimal headline risk
Mission – activity: “Policy-driven public bank”: promotes EU policies by financing investments that further European integration

11. Ultimate obligors of EIB loans
What do we communicate?
Loan quality in perspective – an example
Ultimate obligors of EIB loans
Standard and Poor’s
Credit Quality Index
as of 31 December 2004
The index measures the risk embedded in the country loan portfolio of Multilateral Lending Institution.
The Member States and EU Public Institutions are ultimate obligors for over 50% of the loans
78% of EIB loans are backed by a formal guarantee
Source: Standard & Poor’s (Credit Report, March 2005)

12. Funding strategy and positioning
What do we communicate?
Funding strategy and positioning
Funding strategy:
Pursuit of liquidity across comprehensive yield curves
Close attention to secondary market performance
Types of products:
Sole supranational benchmark issuer across the curve in the three core currencies: EUR, GBP and USD
Tailor-made plain vanilla and structured issues in various currencies
Market characteristics:
Responsiveness: to the market in terms of timing, product and maturity selection
Quality of execution – Transparency – Liquidity - Performance 12

13. (A trademark of EuroMTS)
What do we communicate?
Introducing presence in a currency- an example
€ 5bn 2037
€ 5bn 2020
EIB IN EUR
2004: EUR 17.4bn via 54 transactions
Ground-breaking 15-year EARN benchmark
€ 5bn 2015
€ 5bn 2013
€ 5bn 2012
2005 Highlights: EUR 18.3bn via 84 transactions
Ground-breaking 30-year EARN benchmark
Record issuance of structured transactions
(around 50% of issuance in EUR)
€ 5bn 2010
€ 5.5bn 2009
€ 5.5bn 2008
€ 6.1bn 2008
€ 5bn 2007 €
€ 2.6bn 2007
€ 5bn 2007
€ 5bn 2006
(A trademark of EuroMTS)
€ 5bn 2005 13
As of Oct 2005

14. Selling points for a market segment – an example
What do we communicate?
Selling points for a market segment – an example
EUR Benchmarks – Euro Area Reference Notes (EARNs)
Total benchmark outstanding approx. EUR 64 bn
Diversified exposure to all EU sovereigns (a reminder)
Sovereign class liquidity and tight bid-offer spreads
Most heavily traded quasi-sovereign on MTS system
Transparency: Electronic trading on leading platforms
Liquidity maintenance in the secondary market (e.g. EUR 474 million increase of EARN 3.25% Oct 08) 14

15. Selected topics during an issue
What do we communicate?
Selected topics during an issue
A variety of value drivers other than credit may be considered:
issuer positioning and commitment in this segment
macroeconomic factors, such as interest rates
bond characteristics (coupon, yield, “spreads”, seniority, …)
relative value
supply of comparable debt securities

16. Selected topics during an issue – an example
What do we communicate?
Selected topics during an issue – an example
EARN 2015 fits the market environment
EARN 2015 is launched at a moment of…
… limited government supply
… low yield in short maturities
and offers…
… good value versus core governments 16

17. Selected topics during an issue – an example
What do we communicate?
Selected topics during an issue – an example
Good value versus core governments
Source: CSFB, as of Sep. 9th 2005 17

18. Same audiences To whom do we communicate? Investors Analysts
Rating agencies
Internal audiences
Specialized press

19. Best Borrower in CEE for the year 2004
Press convey recognition among dealers for EIB
Borrower of the Year 2004
European Borrower
Agency / Supranational Borrower
Supranational / Sovereign / Agency bond
Best Supranational Borrower in Western Europe 2004
Top Borrowers as voted by Banks
No.1 Most impressive borrower of 2004
No.1 Best Supranational / Agency
No.1 Most innovative Borrower
Overall Deals of the Year 2004:
No.1 EUR 4bn 4.625% April 2020
No.5 USD 1.5bn 4.625% May 2014
Deals of the year by category:
No1. EURO Sovereign / Supranational / Agency
EUR 4bn 4.625% Apr. 2020
No.1 USD Sovereign / Supranational / Agency
USD 1.5bn 4.625% May 2014
Currencies:
Deal of the year in New Zealand Dollar (NZD 200m 6.5% Sep 2014)
No.2 Emerging Markets (HUF 46bn 9% Jul 2007)
Institutional Performance Award 2004
3 Deals of the Year:
JPY 50bn Japanese CPI-Linked Notes
EUR 190m/EUR 250m CMS Spread Target Redemption Notes
EUR 625m CMS Periodic Capped FRN
Best Borrower in CEE for the year 2004
And deal specific awards:
Best bond deal in local currency
USD 75m / RUB 2.1bn 2010 Synthetic Transaction
Best bond deal in a G7 currency
EUR 4bn 4.625% April 2020

20. The Way to Buy Europe