The European Commission has issued a €9 billion single tranche bond due in June 2036 under its EU SURE programme to protect jobs and workers, and to mitigate the severely negative socio-economic consequences of the coronavirus pandemic. This has been the fifth bond issuance under the programme and the second one in 2021. The bond attracted a strong interest by investors, thanks to which the Commission once again obtained very good pricing conditions, which are being passed on directly to the EU Member States.
Commissioner, in charge of Budget and Administration Johannes Hahn, said: “The fifth EU SURE bond adds to the success story of the EU as a large-scale issuer and borrower. It is yet another sign of confidence that raising the funds for NextGenerationEU will also be successful. The issuance of safe and sustainable SURE and as well as NextGenerationEU bonds is a central element of our efforts to support the EU’s recovery and to continue to give a helping hand to our businesses and citizens.”
The 15-year bond was oversubscribed nearly 10 times. It was priced at a yield of 0.228% and such favourable conditions are passed on directly to beneficiary Member States. The strong response for this new long 15-year bond demonstrates the depth of the diverse investor support for the Commission as a borrower. This achievement was reached in a context of recent volatility in capital markets and rising global interest rates. (See here for more details on the pricing of the transaction).
This has been the fifth bond issuance under the EU SURE programme. So far and following the first four issuances, 15 EU Member States received nearly €53.5 billion in back-to-back loans under SURE. Following today’s transaction, 16 Member States will have received a total of €62.5 billion under SURE.
Throughout 2021, the Commission will seek to raise in addition over €25 billion through the issuance of EU SURE bonds.
Later this year, the Commission is due to also launch the borrowing under NextGenerationEU, the recovery instrument of €750 billion (in 2018 prices) or some €800 billion in current prices to help build a greener, more digital and more resilient Europe.
The Commission has proposed a total of €90.6 billion in financial support to 19 Member States. The Council approval of the proposed €230 million to Estonia is expected in due course.
So far, the Commission has disbursed a total of €53.5 billion to 15 EU Member States: Italy, Spain, Poland, Greece, Croatia, Lithuania, Cyprus, Slovenia, Malta, Latvia, Belgium, Romania, Hungary, Portugal and Slovakia, following the first four EU SURE issuances.
All the bonds issued under SURE were largely oversubscribed, most of them by double-digit numbers, and attracted a diverse base of EU and international investors. This resulted in very favourable pricing terms.
The bonds issued by the EU under SURE benefit from a social bond label. This provides investors with confidence that the funds mobilised will serve a truly social objective.
The funds raised are being transferred to the beneficiary Member States in the form of loans to help them cover the costs directly related to the financing of national short-time work schemes and similar measures as a response to the pandemic.
Source: European Commission raises further €9 billion under SURE (europa.eu)
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