NIB's Head of Treasury: the Bank aims to raise EUR 4 bn in 2009

“Timing, pricing and duration are the keywords for NIB’s funding activities in 2009,” says Lars Eibeholm, Head of Treasury and CFO of NIB. In early April, NIB launched its inaugural 5-year EUR-denominated benchmark transaction of EUR 1 billion, which represents the largest offering NIB has made thus far in its main lending currency.

“Through this transaction, we are achieving our goal of diversifying our funding base and the deal was supported by many new investors,” says Mr Eibeholm.

NIB’s targets for 2009 are to fulfil the funding plan of some EUR 4 billion at the best achievable price subject to an appropriate maturity and a well-diversified investor base.

“It is a matter of timing to get the right pricing,” Mr Eibeholm explains, and adds: “NIB has a small and efficient funding team and we are able to respond quickly to funding proposals from both investors and arrangers.”

Another strength of NIB is its relatively small funding plan. While some of NIB’s peers need to issue 15 to 20 benchmark transactions per year, NIB only needs one or two.

“This fact allows us to make quick moves when we see an opening in the market-or, if necessary, wait. Our main markets will of course be where the investors are: the US, the euro area and Asia,” Mr Eibeholm continues.

Year 2008 full of challenges

The year 2008 was tough for the financial market. The crisis, which escalated in October, triggered turmoil in the markets. Developments in the financial markets increased funding costs in general, also for NIB and other supranationals towards the end of the year. NIB, though, managed to maintain its good access to the funding markets and debt issuance amounted to a record high EUR 4,681 million in 2008.

“In November, NIB re-opened the USD benchmark market by issuing a 3-year benchmark bond of USD 1 billion. The bond was the first on the market since October. Investors responded positively, the order book was fully subscribed and, in spite of the volatile times, the bond was a success,” says Mr Eibeholm.

“We have strong support from our member countries and our biggest owner countries have strong economies despite the current economic situation,” Mr Eibeholm points out.

Iceland and the Baltic countries have been affected by the economic turmoil more than the other owners of the Bank. These economies are relatively small, and Mr Eibeholm does not believe the difficulties in these countries will affect the attractiveness of NIB’s bonds.

“We will continue to grant loans and make commitments in order to support the competitiveness of the member countries. I believe NIB will continue to see good demand from global investors, who are looking at NIB as a strong AAA-rated issuer,” concludes Mr Eibeholm.

Updated in May 2009