The Bank receives no aid, subsidy or budgetary contribution from its member states to finance its activities. The necessary resources are therefore raised on the international capital markets in the form of borrowings.
For its borrowing activity, the Bank has been rated by Moody’s since 1988, by Standard & Poor’s since 1989, by Fitch Ratings since 1996 and by Scope Ratings* since 2020. On its principal long-term debt, it enjoys the rating Aa1 by Moody’s – stable outlook , AAA by Standard & Poor’s – stable outlook, AA+ by Fitch Ratings – stable outlook and AAA* by Scope Ratings – stable outlook. On its short-term debt the Bank is rated P-1 (Moody’s) / A-1+ (Standard & Poor’s) / F1+ (Fitch Ratings) / S-1+ (Scope Ratings*).
To ensure that it maintains access to the funds needed to pursue its activities, the Bank continues to have recourse both to large-scale borrowings in major currencies, aimed at a broad range of institutional investors, and to issues in given currencies or with specific structures corresponding to more particular requirements.
- Coverage of lending needs
- Repayment of maturing debt
- Maintaining a sufficient liquidity level
- Diversification of funding sources based on 3 pillars
- Benchmark issues in major currencies on a regular basis
- Other public markets, taps and private placements answering specific investor demand in terms of size, currencies, maturities and structures
- Pioneering Social Inclusion Bond franchise
Additional funding characteristics
- USD and GBP market usually for short- to medium-term and EUR for long-dated maturities
- Other currencies to optimise funding activity on a sustainable basis
- Maturity profile correlated with the average maturity of the loan portfolio
- 0% risk-weighted, Level 1 High Quality Liquid Assets
- Bond issue programmes
- U.S. SEC-registered Debt Programme for USD benchmark issues
- EMTN Programme
- Australian and New Zealand Dollar MTN Programme
- Japan Shelf Registration
- Stand-alone documentation in other markets
- Borrowing authorisation (with prefunding possibility)
- 2020: up to EUR 4.5 bn
- 2021: up to EUR 5.5 bn
In 2019, the Bank borrowed a total amount of € 4.5 billion, broken down into 11 funding operations, including three re-opening transactions of existing lines, with maturities of one year or more. This amount is slightly lower than the funding volume in 2018, which stood at € 4.9 billion, and fulfilled three main objectives: to cover the requirements arising from the Bank’s lending activity, to enable the Bank to honour its debt maturities, and to enable the Bank to maintain liquidity at the level set by the Administrative Council.
39.8% of the funds raised in 2019 were denominated in US dollars, 38.9% in euros, 17.2% in British pounds, 2.3% in Norwegian krone, 1.2% in Australian dollars and 0.7% in New Zealand dollars.
The average maturity of the issues launched in 2019 was 5.7 years, the same as in 2018. 57.1% of the issues carried out under the borrowing programme had final maturities of close to five years or more, in order to ensure the refinancing of the Bank’s loans and avoid cash gaps in the coming years.
CEB's Social Inclusion Bonds
Socially responsible investments are gaining in importance in the international capital markets and the CEB with its specific social mandate dating from the creation of the institution in 1956 is particularly well positioned for issuing social bonds and allocating the proceeds to its lending.
The relevant documentation includes the following:
- CEB’s updated Social Inclusion Bond Framework (April 2020)
This document sets out the framework of CEB’s Social Inclusion Bonds and describes the underlying rationale and methodology for loan selection, management of proceeds and reporting.
- Sustainalytics SARL - Second Opinion (April 2020)
The CEB engaged Sustainalytics to provide an independent assessment of the social quality of the portfolio of financed Eligible Social Loans and to assess the alignment of the CEB Social Inclusion Bond Framework with CEB’s sustainability objectives and with ICMA’s Social Bond Principles.
- Social Inclusion Bond 2017 Report (March 2018)
- Social Inclusion Bond 2018 Report (March 2019)
- Social Inclusion Bond 2019 Report (March 2020)
The CEB’s Social Inclusion Bonds can be issued through any of its various bond issue programmes described in the section Funding Strategy above.
Social bond teach-ins have been organised for a number of the Bank’s clients. If your organisation is considering issuing a social bond, contact Investor Relations.
Bond Buyback Policy
In response to inquiries received from its bondholders, the CEB has adopted a buyback policy. The lead managers of CEB bonds are requested to maintain a two-way liquid secondary market. Nevertheless, the Bank considers the buyback of its debt as a service to investors when two-way quotations are not available for a given bond.
Buyback transactions occur mainly in the case of non-benchmark issues such as private placements and structured notes. Upon an investor request for a predefined nominal amount, the CEB will quote a price at which it is willing to repurchase the specific bonds on a best efforts basis. Buybacks can be for the total outstanding nominal amount of an issue or for part of it.
The CEB cancels the repurchased bonds as soon as the transaction is concluded and informs the relevant market participants of the new outstanding amount of the bond issue.