A Touchstone to prove Golde with: EIB s Issuance in European Common Currencies

Transcription

1 A Touchstone to prove Golde with: EIB s Issuance in European Common Currencies Contribution to EIBI-Uni.Lu s seminar on April 23, 22 Europe in Motion: A Capital Markets Perspective

2 Bretton-Woods collapse New reserve currencies Large liquidity surpluses Increasing intern l financial intermediation High forex volatility Internal market at risk Monetary «add-on» to European objectives 1. EIB ECU short term Notes 1. ECU- IR swap 1. ECU- DRS First EIB ECU jumbo (ECU bn, via reopenings) First and second EURCO issues First EIB ECU issue (ECU 40 million) Euroclear Cedel Swift Werner Report Snake USD/gold Break up DM/US floating EMS 2 UCITS Directive Delors Report Maastricht Treaty ISD

3 16-18 Madrid Council sets framework for Monetary Union... but legal certainty still to come (e.g. continuity of contracts) First Eurotributary issue First issue with guaranteed conversion ECU/EUR 1:1 Provide certainty to market Prepare for unified capital market Promote euro inside and outside Europe First EUR Global (EUR 2 bn, first market making agreements) Council regulation on Euro First EUR issue (EUR 1.3 bn) Council regulation on Euro First Trading on MTS Exchange Offer Programme Size Market making Infrastructure Dec Jun Dec May Madrid Council Stability Pact Monetary Union 3

4 19-21 Multiple Sovereign supply in one currency (higher competition) Concentration in banking and investment industries Growing importance of secondary market liquidity Capitalize on previous steps (Eurotributaries) Create a cooperative framework for MM Obtain transparency via technology (Bookbuilding, B2B, B2C) First EUR 5 bn (Global) EARN Redenomination and consolidation of eurotributaries First EARN (EUR 2 bn) 2. EARNs Programme («voluntary market-makers») Filing of the EARNs Programme with the SEC First EARNs programme ( primary dealers ) First EUR 3 bn EARN Trading of entire EIB curve on MTS/EuroMTS Mar- Feb- Nov- EuroMTS FSAP 4 Lamfalussy/ CESR 1st & 2nd Giovannini Reports on C&S

5 Demographic trends urge pension reforms («three pillars») and IAS Directive extends pan-european transparency on pension obligations, strengthening demand for longterm bonds versus equity Increasing EU-focus on retail (PD, MiFID) Accelerating concentration in EU-banking Growing international role of the euro Growing international role of the RMB IAS Regulation EARN 3bn 24 First participation of Bank of China in an EARN syndicate (Selling Group) Confidence premium Nov Extend issuance tenors Foster transeuropean distribution of structured products Extend number of bank counterparties (21 different bookrunners of EARNs so far) Intensify communication outside Europe Intensify cooperation with China EARN 5bn 27 First ultra-long EARN EARN 5bn 20 First EARN > 10yrs April Prospectus New IAS Basle II Directive in force MiFID in (PD) force Directive on markets in financial instruments («MiFID») 2. EPOS 6mn 22 The Climate Awareness Bond Jan PD in force EARN 5bn 25 Jul White Paper on Financial Services Policy EARNs 5bn EPOS 1bn 26 First Eurozone passporting EARN 5bn 21 EARN 5bn EARNs 3bn 24 Bank of China Co-Lead Manager Nov (EIB riskweighting factor at 0%)

6 28-22 Bank crisis Decrease in underwriting/mm commitment End of issuer/intermediary liquidity pact Widening of credit spreads and new issue premia Distortions in the IRS and CCS markets Increase of public sector issuance Increase of EIB funding needs Annihilation of retail distribution ECB liquidity injections Sovereign crisis-spread volatility to Bunds Coordination lag in communication and actual institutional response Fragmentation of investor base Escalation of event risk, particularly for larger transactions Appearance and intensification of peer issuance (EFSM, EFSF, ESM) Perceived credit deterioration Jun 29: EARNs for 31.5bn, of which 25bn >= 5 years, of which 8bn >= 15 years The Popular bond (ECU 180 mn) European economic recovery plan Council regulation establishing a EFSM Increase bank fees Prove capital market access in size under volume constraints in shorter maturities Gain access to new promising product segments Extend primary market cooperation to new intermediary sectors (ECoops) Develop and implement strategic approach to targeted issuance Foster synergies between EARNs and ECoops Coordinate communication and issuance with peers ECoop: EUR bn issued so far Establishment of EFSF and its subsequent modification Apr 22: EARNs for 11bn and ECoops for bn Average maturity 8.3 years 1. EEcoop (1 bn) 1. Non-cooperative Ecoop (1 bn) 1. Kooperationsbond (1 bn) 1. Eurocooperative FRN (1 bn) Treaty establishing the ESM Treaty on S,C&G in the EEMU Nov May 10 June Oct Feb 12 March

7 An adequate provision for the support of public credit is needed The Secretary of the Treasury, in obedience to the resolution of the House of Representatives has applied himself to the consideration of a proper plan for the support of the public credit For when the credit of a country is in any degree questionable, it never fails to pay an extravagant premium, in one shape or another, upon the loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future payment. It is a well-known fact, that in countries where the national debt is properly funded, and an object of undoubted confidence, it answers most of the purposes of money The benefits of this are various and obvious. First. Trade is extended by it Secondly, Agriculture and manufacturers are also promoted by it Thirdly. The interest of money will be lowered by it And from the combination of these effects additional aids will be furnished to labor, to industry and to arts of every kind. But these good effects of a public debt are only to be looked for when, by being well funded, it has acquired an adequate and stable value. Till then it has rather a contrary tendency. The fluctuation and insecurity incident to it in an unfunded state render it a mere commodity, and a precarious one. As such, being only an object of occasional and particular speculation, all the money applied to it is so much diverted from the more useful channels of circulation, for which the thing itself affords no substitute; so that, in fact, one serious inconvenience of an unfunded debt is that it contributes to the scarcity of money. Alexander Hamilton, Secretary of the Treasury of the United States, First Report on Public Credit, December 13, 1790 Seite 7

8 to proceed under full sail Seite 8