The European Commissions latest transaction involved a €9 billion EU-Bond due on 12 December 2035. It offers a yield of 3.413% at a price of 99.674%, reflecting strong investor interest with bids exceeding €95 billion, indicating an oversubscription rate of nearly 10 times.
The funds raised will finance EU policy programs, particularly NextGenerationEU and support for Ukraine.
Details of the Bond 10-year Bond Set to mature on 12 December 2035, this bond has a 3.375% coupon and a 3.413% yield, equivalent to a 99.674% price. It has a 65 bps spread over mid-swap, 52.9 bps over the Bund maturing on 15 February 2035, and -15.5 bps below the OAT maturing on 25 May 2035. The order book surpassed €95 billion. Lead managers included BofA, CA-CIB, DZ Bank, GS, and Santander, with Commerzbank, Danske, Intesa, KBC, MPS, and UBS as co-leads. |
The Commission has now issued approximately €40.17 billion of its €90 billion bond issuance target for the first half of 2025. A full overview of all EU transactions executed to date is available online. A detailed overview of the EUs planned transactions for the first half of 2025 is also available in the EU funding plan. The next transaction in the EUs indicative issuance calendar is an EU-Bill auction on 19 March 2025.
Background
The European Commission can borrow on international capital markets on behalf of the EU to fund selected programs. Known for its consistent presence in debt securities markets over 40 years, its issuances are in euro and guaranteed by the EU budget. The unified funding strategy since 2023 streamlines the process under the NextGenerationEU framework.
Since January 2023, the EU funds its different policy programmes by issuing single-branded EU-Bonds rather than separately labelled bonds for individual programmes. This follows the creation of a unified funding approach, extending the diversified funding strategy first established in 2021 for NextGenerationEU to other policy programmes funded by EU borrowing.
To finance EU policies as efficiently and effectively as possible, the Commissions issuances are structured by semi-annual funding plans and pre-announced issuance windows. In parallel, a framework incentivising EU Primary Dealers to provide quotes on EU securities on electronic platforms is in place since November 2023 and a new repurchase facility is now made available to EU Primary Dealers as from 7 October 2024 to support the secondary market liquidity through the use of EU-Bonds in repurchase agreements.
With todays transaction, the EU has now issued €470.59 billion in EU-Bonds under the unified funding approach. Of the proceeds raised, almost €297 billion has been disbursed to Member States under the NextGenerationEU Recovery and Resilience Facility. A further €70 billion has been allocated to other EU programmes benefitting from NextGenerationEU funding. Furthermore, over €13.11 billion has been disbursed to Ukraine under the Ukraine Facility that will finance up to €33 billion in loans to Ukraine between 2024 and 2027. In addition, €3 billion has recently been disbursed under the new €18 billion EU exceptional Macro Financial assistance loan which will be repaid with proceeds from immobilised Russian State assets as part of the G7-led Extraordinary Revenue Acceleration (ERA) loans initiative.
The EUs total debt outstanding now stands at about €646.67 billion, of which €28.33 billion in the form of EU Bills.
Information on the allocation on the investors in this transaction is available in the transactions section of the EU as a borrower website. More information on EUs issuance activities is available here: The EU as a borrower – investor relations - European Commission (europa.eu)
* Because the Commission engages in short-term liquidity management operations to smooth upcoming funding needs, amounts raised may not necessarily equal amounts disbursed at a given point of time.