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European Investment Bank to price 0% bonds linked to environmental index
By Laura Lutz
Des Moines, May 22 - The European Investment Bank plans to issue a euro-denominated, zero-coupon bond due June 28, 2012 linked to the newly created FTSE4Good Environmental Leaders Europe 40 index, with a minimum yield of 5% at maturity.
The index will consist of those companies from the existing FTSE4Good Europe index that score a "best practice" rating according to the FTSE4Good Environmental Scoring Methodology. The new index will be proprietary for six months, according to a bank news release.
At maturity, investors will receive par plus the return on the index times a participation rate that will be between 75% and 85%. The payout will be subject to a floor of 105% of par.
The participation rate will be set at pricing.
At maturity, investors will have the option to use any redemption amount in excess of 25% to buy and cancel European Union carbon dioxide allowances.
Proceeds will be used for investment in future European Investment Bank lending projects in renewable energy and energy efficiency.
The bond will be sold through a simultaneous public offering in the 27 domestic markets of the European Union.
The offering period is expected to run from May 29 to June 22, and the bond is expected to settle on June 28.
Dresdner Kleinwort, Merrill Lynch International, and UniCredit Markets and Investment Banking are the lead managers. BBVA, Barclays Capital, NBG and Natixis are the co-lead managers. Dexia Capital Markets, ING Wholesale Banking and UBS Investment Bank are the co-managers.
European Investment Bank is the European Union's long-term lending institution. It is based in Luxembourg.
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