Brussels, 8 October 2024
The European Commission has today raised €11 billion of EU-Bonds in its 9th syndicated transaction for 2024.
The dual-tranche transaction concerned a €5 billion tap of the EU-Bond maturing on 6 December 2027, and a €6 billion tap of the EU-Bond maturing on 4 October 2039. The 3-year bond was priced 101.101% with a re-offer yield of 2.506%, while the 15-year bond was priced 101.734%, with a re-offer yield of 3.227%. Bids received were in excess of €81 billion on the 3-year bond and in excess of €85 billion on the 15-year bond. This equals oversubscription rates of approximately 16-times and 14-times, respectively.
The proceeds of the transaction will be used to finance EU policy programmes (most notably in the context of NextGenerationEU and support to Ukraine).
Today’s bond syndication
3-year tap
Due on 6 December 2027, this bond carries a coupon of 2.875% and came at a re-offer yield of 2.506%, equivalent to a price of 101.101%. The spread to mid-swap is 11 bps, which is equivalent to 44.9 bps over the Bund due on 15 October 2027 and 3.3 bps over the OAT due on 24 September 2027.
The final order book was of over €81 billion.
15-year tap
Due on 4 October 2039, this bond carries a coupon of 3.375% and came at a re-offer yield of 3.227%, equivalent to a price of 101.734%. The spread to mid-swap is 66 bps, which is equivalent to 72.1 bps over the Bund due on 4 July 2039 and about 1.9 bps through the OAT due on 25 October 2038.
The final order book was of over €85 billion.
The joint lead managers of this transaction were Barclays, BNP Paribas, Goldman Sachs, LBBW and Nordea. Danske, Intesa, KBC, MPS, Natixis and Santander acted as co-leads.
The Commission has now issued approximately €44 billion of its €65 billion funding target for the second half of 2024. A full overview of all EU transactions executed to date is available online. A detailed overview of the EU’s planned transactions for the second half of 2024 is also available in the EU funding plan. The next transaction in the EU’s indicative issuance calendar is an EU-Bond auction on 21 October 2024 *.
Background
The European Commission is empowered by the EU Treaties to borrow from the international capital markets on behalf of the European Union to finance selected EU policy programmes. It is a well-established name in debt securities markets, with a track record of bond issuances over the past 40 years. All issuances executed by the European Commission are denominated exclusively in euro. All EU borrowing is guaranteed by the EU budget, and contributions to the EU budget are an unconditional legal obligation of all Member States under the EU Treaties.
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 Commission’s 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 today’s transaction, the EU has now issued €410 billion in EU-Bonds under the unified funding approach. Of the proceeds raised, almost €260 billion has been disbursed to Member States under the NextGenerationEU Recovery and Resilience Facility. A further €64 billion has been allocated to other EU programmes benefitting from NextGenerationEU funding. In addition, over €10 billion has been disbursed to Ukraine in 2024 so far under the Ukraine Facility that will finance up to €33 billion in loans to Ukraine between 2024 and 2027. This support complements the €18 billion disbursed to Ukraine under the Macro-financial Assistance+ policy in 2023*.
The EU’s total debt outstanding now stands at about €577 billion, of which around €20 billion in the form of EU Bills.
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- 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 EU’s issuance activities is available here: The EU as a borrower – investor relations – European Commission (europa.eu)
*Updated on 09.10.24 at 09:47
* 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.