BEST SUPRANATIONAL BORROWER: EIB
Some dreamers have a distant vision of the European Investment Bank (EIB) as the main issuing vehicle of a federal European government. It would be like the US treasury, holding auctions at yields well below the rest of the market.
Although that vision isn't quite what the treaties of Rome or Maastricht had in mind, the EIB's role will change dramatically from next year. Some 85% of its debt will then be in one currency, the euro. Instead of struggling to establish benchmarks in 15 European currencies it can concentrate on producing a smooth yield curve in the euro. And, after Germany, Italy and France, it will be the fourth-biggest issuer in euros, refinancing around €20 billion ($22.25 billion) each year.
It has already been establishing a euro yield curve by issuing euro-tributary bonds (bonds that will convert automatically from national currencies into euro-denominated issues from January 1999). Since its first euro-tributary in January 1997 the EIB has issued Ecu15 billion ($16.7 billion) of them, filling maturities from 2002 to 2028.
Obsolete weighting
But René Karsenti, director-general of finance at the EIB, isn't satisfied with the conditions under which the EIB is forced to operate.