Brussels, 11 May 2022
The European Commission has today issued a further €9 billion in a dual tranche transaction under the NextGenerationEU recovery instrument. The deal is the 9th syndicated transaction under NextGenerationEU, and the 4th of 2022. It consisted of a new 3-year bond of €6 billion due on 4 July 2025 and a €3 billion tap of an existing 30-year bond due on 6 July 2051. This is the first 3-year bond the Commission has issued under its diversified funding strategy. With its sale, the Commission has now established its issuances across the full spectrum of long term bond maturities (3 to 30 years).
The transactions attracted very strong interest by investors. The 30-year bond was over 16 times oversubscribed with bids exceeding €48 billion, thus becoming the most oversubscribed NextGenerationEU transaction to date.
The Commission will continue using the funds raised to support Europe’s recovery and resilience, financing Member States under the Recovery and Resilience Facility as well as under other programmes.
Reacting to the deal, Commissioner in charge of Budget and Administration, Johannes Hahn said: “The smooth execution of today’s deal is further proof of the strength of the EU as an issuer, even in volatile markets. The funds raised continue to serve EU citizens, businesses and communities, supporting Europe’s recovery and resilience.”
With today’s deal, the Commission has now issued €111 billion in long-term funding under its NextGenerationEU programme, of which €23 billion in NextGenerationEU green bonds. The Commission has raised €40 billion under NextGenerationEU since January 2022, or 80% of the programme’s €50 billion funding target for the first six months of the year.
The Commission also continues to raise funds via auctions of EU-Bonds and EU-Bills, giving it further flexibility to meet its payment needs.
Background
NextGenerationEU is a temporary instrument bringing up to €800 billion in support to Europe’s recovery from the coronavirus pandemic and building a greener, more digital and more resilient Europe.
To finance NextGenerationEU, the Commission will borrow up to around €800 billion in current prices on capital markets by the end of 2026. Of this total, up to €723.8 billion will be made available under the Recovery and Resilience Facility. An additional €83.1 billion will support key EU programmes.
To raise the necessary funding under the best possible market conditions, the Commission is implementing a diversified funding strategy. This strategy combines the use of different funding techniques with an open and transparent communication to market participants. This facilitates the market’s absorption of the funding programme while at the same time giving the Commission the ability to react quickly to any market turbulence.
Technical section
| 4rd NextGenerationEU bond syndication for 2022
3-year bond The 3-year bond carries a coupon of 0.8% and came at a re-offer yield of 0.820% providing a spread of –41 bps to mid-swaps, which is equivalent to 43.6 bps over the 3-year Bund due in April 2025 and to 24.7 bps over the 3-year OAT due in May 2025. The final order book was of over €56 billion, which meant that the bond has been more than 9 times oversubscribed. 30-year bond The 30-year bond carries a coupon of 0.7% and came at a re-offer yield of 1.835 % providing a spread of +22 bps to mid-swaps, which is equivalent to 70.9 bps over the 30-year Bund due in August 2050 and to -8.2 bps to the 30-year OAT due in May 2050. The final order book was of over €48 billion, which meant that the bond has been over 16 times oversubscribed. The joint lead managers of this transaction were BNP Paribas, Goldman Sachs Bank Europe SE, NatWest Markets, Nordea and UniCredit. |
New 3-year bond:
| INDUSTRY STATISTICS | |
| Fund Managers | 34% |
| Central Banks / Official Institutions | 31% |
| Bank Treasuries | 18% |
| Insurance and Pension Funds | 11% |
| Banks | 5% |
| Hedge Funds | 1% |
| Other | |
| 100% | |
| COUNTRY STATISTICS | |
| UK | 29% |
| Nordics | 14% |
| Germany | 9% |
| France | 7% |
| Italy | 7% |
| Middle East & Africa | 7% |
| Iberia | 6% |
| Other Europe | 5% |
| Switzerland | 5% |
| Benelux | 5% |
| Americas | 4% |
| Asia | 2% |
| NO COUNTRY | |
| 100% |
Tap of existing 30-year bond
| INDUSTRY STATISTICS | |
| Insurance and Pension Funds | 28% |
| Fund Managers | 24% |
| Bank Treasuries | 24% |
| Central Banks / Official Institutions | 14% |
| Banks | 8% |
| Hedge Funds | 2% |
| Other | |
| 100% | |
| COUNTRY STATISTICS | |
| Nordics | 18% |
| Benelux | 13% |
| UK | 12% |
| Other Europe | 11% |
| Germany | 11% |
| Italy | 11% |
| France | 9% |
| Iberia | 9% |
| Switzerland | 3% |
| Asia | 2% |
| Middle East & Africa | 1% |
| Americas | |
| NO COUNTRY | |
| 100% |
For More Information
Press release funding plan January-June 2022
Q&A diversified funding strategy