European Commission issues €7 billion in its 10th syndicated transaction of 2024

The European Commission  raised  last november 19 €7 billion of EU Bonds in its 10^th syndicated transaction for 2024, €3 billion of which in the form of NextGenerationEU (NGEU) Green Bonds.

The dual-tranche transaction concerned a €4 billion tap of the EU Bond maturing on 4 December 2031, and a €3 billion tap of the NextGenerationEU Green Bond maturing on 4 February 2043. The 7-year bond was priced 98.618% with a re-offer yield of 2.719%, while the 18-year bond was priced at 72.739%, with a re-offer yield of 3.260%. Bids received were in excess of €66 billion on the 7-year bond and in excess of €80 billion on the 18-year bond. This equals oversubscription rates of approximately 17-times and 27-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) as well as green projects in Member States’ national Recovery and Resilience plans (RRPs) – the roadmaps to spending under NextGenerationEU. All NGEU Green Bond issuances are guided by the NGEU Green Bond Framework, which is aligned with the Green Bond Principles of the International Capital Market Association (ICMA)

The Commission has now issued approximately €60 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 25 November 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.

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 this transaction, the EU has now issued €426.58 billion in EU Bonds under the unified funding approach. Of the proceeds raised, almost €262 billion has been disbursed to Member States under the NextGenerationEU Recovery and Resilience Facility. A further €67 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 €596.46 billion, of which around €22 billion in the form of EU Bills.

More information: European Commission