With the end of Libor looming, steps have to be taken to find a new pricing reference and to see how such a deal will work in practice.
No order information was available by press time, but by fairly early this Friday we should know whether the different decisions made by EIB on approaching the issue will be the model for others to follow, will need some tweaking, or should be best avoided.
One could argue that the UK Debt Management Office should be taking the leads on Libor replacement, but to be fair, for a multitude of reasons, supranationals are able to be far more nimble when it comes to new products than their sovereign cousins.
Whatever the outcome, it says a lot about the ambition and sense of duty of the EIB that it was willing to step up and be the guinea pig for a new approach to bond market pricing — and kudos also to the banks wearing the laboratory coats in this experiment.
That it is doing so at a time when UK and European politicians are in a seeming war of attrition over the terms of the UK’s exit from the European Union shows that in so many ways the people who raise the cash for the public sector are much more responsible than those who decide how to spend it.
Now that the EIB has set the bar, we can only hope that the rest of the market starts getting serious about Libor’s end.
