Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or at minimum each six months in the cases of sovereign, sub-sovereign and supranational organisation issuers. Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key ratings assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the European Investment Bank (AAA/Stable; S-1+/Stable) on 21 February 2022. This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

Key rating factors

For the updated Annex accompanying this review, click here.

The European Investment Bank’s (EIB) AAA rating reflects the supranational’s ‘excellent’ intrinsic strength and ‘very high’ shareholder support. The EIB’s institutional profile is characterised by a proven track record of excellent governance and an irreplaceable mandate for its EU shareholders. In addition to being at the forefront of implementing the European Fund for Strategic Investments and its successor programme InvestEU, it is catalysing Europe’s transition to carbon neutrality and playing a critical role in the EU’s response to the Covid-19 crisis.

The EIB’s financial profile benefits from its persistent ability to generate and retain capital every year since its inception in 1958, including in 2020-21 during the Covid-19 crisis. The EIB’s excellent asset quality with negligible non-performing loans is driven by its conservative lending policies, high asset protection, and its widely diversified portfolio across geographies, sectors and counterparties. The EIB’s strong liquidity profile is driven by its high, prudently managed liquid assets, excellent market access given its global benchmark issuer status, diversified funding base, and unique access to the liquidity facilities of the ECB. Challenges, which are marginal at the AAA level, relate to its high leverage and relatively moderate liquidity buffers compared to peers.

The EIB’s unaudited H1-2021 financial results confirm a solid financial performance, with stable core earnings of EUR 1.5bn (vs EUR 0.5bn in H1-2020) and excellent asset quality, with impaired loans declining to EUR 1.6bn from EUR 1.9bn (0.4% of loans) and arrears falling slightly to EUR 118m from EUR 121m as of end-2020. Treasury assets also increased markedly to EUR 110.8bn (end-2020: EUR 85.6bn), fully covering projected net outflows over the next 12 months. The EIB Group Operational Plan 2022-2024 points to planned new signature volumes of EUR 60.8bn in 2022, EUR 64.3bn in 2023 and EUR 68.8bn by 2024, with annual disbursements ranging between EUR 43-53bn. For 2022, the bank’s global borrowing authorisation is set at EUR 50bn, markedly below the EUR 70bn approved during the height of the Covid-19 crisis in 2020-21. The expected annual borrowing needs in 2022 are EUR 45bn, below the funding realised in 2021 (EUR 55.3bn) and 2020 (EUR 70.0bn).

Finally, the EIB benefits from highly rated key shareholders. The six largest European economies – Germany (AAA/Stable), France (AA/Stable), Italy (BBB+/Stable), Spain (A-/Stable), the Netherlands (AAA/Stable) and Belgium (AA-/Stable) – together account for around 78% of the EIB’s capital. Their weighted average rating of AA- drives Scope’s very high assessment of shareholder support, which is further supported by the EIB’s high-quality callable capital of about EUR 135.7bn which as of end-2020 covers around 30% of its outstanding mandated assets.

The Stable Outlook reflects Scope’s assessment of the EIB’s financial buffers to withstand external and balance sheet-driven shocks. The rating could be downgraded if: i) the EIB records sustained losses; ii) its liquidity buffers are significantly reduced; and/or iii) highly rated key shareholders are downgraded.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Supranational Entities, 7 September 2021) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Alvise Lennkh, Executive Director.

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