Europe’s development banks have taken precautionary measures to ensure they can navigate uncertainty in credit markets caused by the U.K. referendum.
The European Investment Bank brought forward its funding plans to avoid sales being disrupted by potentially volatile markets after the vote, according to Eila Kreivi, head of the bank’s capital markets department. KfW, the Frankfurt-based development bank, has tried to avoid issuing larger deals, according to Petra Wehlert, its head of capital markets.
U.K. voters were headed to the polling booths on Thursday for the landmark referendum on membership of the 28-nation bloc, after opinion polls had signaled the decision on whether to stay or leave was too close to call. Financial markets were roiled in the run-up as opposing Brexit and Remain camps traded warnings of economic decline and political instability either way.
“The best thing is to keep yourself safely liquid and to keep other funding sources open,” the EIB’s Kreivi said at Euromoney’s Global Borrowers & Bond Investors Forum in London. “We can sit out for a few months if we need to.”
The Luxembourg-based EIB has sold about 46 billion euros ($52 billion) of bonds this year, more than for the same period last year, for its funding program of 60 billion euros to 65 billion euros, Kreivi said.
KfW didn’t bring forward sales ahead of the referendum and has sold about 42 billion euros from its 70 billion-euro to 75 billion-euro funding program, according to Wehlert.
“We did a benchmark transaction about two weeks ago and have tried to avoid issuing larger transactions in this period of time,” she said at the conference this week. “We don’t expect an impact on our funding program.”
Supranational institutions and development banks sold the equivalent of about $29 billion of bonds in June, compared with $62 billion in May and the lowest for any month this year, according to data compiled by Bloomberg. Corporate debt sales also slumped this month, the data show.
“Why would you possibly put yourself in a position where you have to issue into a stressed market?” Keith Price, head of frequent borrower and financial institutions group syndicate at JPMorgan Chase & Co, said at the Euromoney conference. “Everyone has maneuvered into a position where you don’t have to issue.”