Recently issued: 5.5y AUD sustainability bonds from European Investment Bank

European Investment Bank recently issued new 5.5y AUD sustainability bonds with a coupon of 5.05%. As a highly defensive supranational issuer, EIB offers very strong credit quality, though yield upside is likely to be modest.

Key Points

(Unless otherwise stated, data is as of 1H25 [30 June 2025].)

European Investment Bank (EIB) recently issued new 5.5-year AUD sustainability awareness bonds (SAB) with a 5.05% coupon (EIB 5.050% 29Oct2031 Qsov (AUD)). SAB proceeds are allocated to eligible activities that contribute substantially to EU’s sustainability objectives.
EIB is the European Union’s (EU) long-term lending arm and one of the largest supranational financial institutions globally. It primarily finances projects that support the EU’s broader policy objectives. Established in 1958, EIB is owned by the 27 EU member states.
EIB is rated AAA (stable) by S&P, Aaa (stable) by Moody’s, and AAA (stable) by Fitch. The bond is unrated. These bonds will generally be traded in denominations of AUD 1,000 outside of Australia.
EIB remains an exceptionally strong issuer. As of 1H25 (30 June 2025), it had a balance sheet of €575.6b, including €426.6b in borrowings and €84.8b in its own funds. These own funds comprise €22.2b of paid-in capital and €62.6b of reserves and retained profit but exclude €226.6b of callable capital from its member states.
Liquidity remained very strong. EIB reported a liquidity coverage ratio (LCR) of 591% and a net stable funding ratio (NSFR) of 125%. It held €97.7b in liquid assets (excluding access to the ECB’s refinancing facility), enough to cover 99.2% of projected net cash outflows over the next 12 months.
Asset quality remained very robust. Impaired loans stood at €3.1b, equal to just 0.7% of total disbursed loans as of 1H25. In addition, a large proportion (86.8%) of the risk portfolio was investment-grade, based on the higher of borrower or guarantor ratings. It reported a CET1 ratio of 45.7%.
At the time of writing, these bonds were trading at an indicative price of 100.031, or an indicative yield of 5.044%. This suggests a pickup of roughly 30 basis points (bps) over Australian sovereigns, which are also rated AAA (5-year: 4.716% / 6-year: 4.777%).
Overall, this is a new issue with very low credit risks. It is most compelling for buyers who want defensive AUD exposure with top-tier credit quality, while still offering a modest yield pickup over Australian sovereigns.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

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