The European Commission has raised €11 billion of EU-Bonds in its 1st syndicated transaction for 2025.
The dual-tranche transaction concerned a new €6 billion EU-Bond maturing on 4 July 2028, and a €5 billion tap of the EU-Bond maturing on 5 October 2054. The 3-year bond was priced 99.999% with a re-offer yield of 2.628%, while the 30-year bond was priced at 94.808%, with a re-offer yield of 3.664%. Bids received were in excess of €82 billion on the 3-year bond and in excess of €115 billion on the 30-year bond. This equals oversubscription rates of approximately 14-times and 23-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 syndication3-year Bond Due on 4 July 2028, this bond carries a coupon of 2.625% and came at a re-offer yield of 2.628%, equivalent to a price of 99.999%. The spread to mid-swap is 17 bps, which is equivalent to 32.4 bps over the Bund due on 13 April 2028 and 12.4 bps below the OAT due on 25 May 2028.The final order book was of over €82 billion. 30-year Bond tap Due on 5 October 2054, this bond carries a coupon of 3.375% and came at a re-offer yield of 3.664%, equivalent to a price of 94.808%. The spread to mid-swap is 127 bps, which is equivalent to 82.0 bps over the Bund due on 15 August 2054 and 29.4 bps below the OAT due on 25 May 2054.The final order book was of over €115 billion.The joint lead managers of this transaction were Barclays, BNP, JP Morgan, LBBW and NatWest Markets. |
This €11 billion transaction is the first step towards meeting the EU’s €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 EU’s planned transactions for the first half of 2025 is also available in the EU funding plan. The next transaction in the EU’s indicative issuance calendar is an EU-Bond auction on 27 January 2025.
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.
The Commission is also publishing annual reports on the allocation of proceeds from the issuance of NGEU Green Bonds and their estimated realised and expected climate impacts. Regularly updated information about the eligible and reported green bond expenditure can also be found in the NextGenerationEU Green Bond Dashboard here: Dashboard – European Commission (europa.eu).
With today’s transaction, the EU has now issued €441.42 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 €69 billion has been allocated to other EU programmes benefitting from NextGenerationEU funding. Furthermore, over €13 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 EU’s total debt outstanding now stands at about €611.09 billion, of which €21.91 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 EU’s 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.