Does the EIB benefit from market fluctuations affecting its outstanding bonds?
The EIB’s hedging of issues means it generally does not gain/lose with market movements in the price of the bonds following issuance. At issuance, the Bank enters into derivatives contracts with different intermediaries to hedge its exposure to the movement in interest rates or to any other characteristics of the structure of the bond. Therefore it fixes at issuance the overall cost to EIB (in terms of spread to a short term interest rate reference) that a particular bond will have during its life. Therefore, the EIB does not benefit from market movements during the life of the bond.
