Friday, March 24, 2023

Brussels raises €6,000 million in eleven-year bonds

The European Commission raised €6 billion today in an eleven-year bond issue that will finance the European Union’s (EU) post-covid recovery fund and macro-financial assistance to Ukraine.

The syndicated operation, the third so far this year, registered a demand nine times higher than the offer, of €54,000 million in total, according to the Community Executive in a statement.

The securities, maturing in 2034 and a coupon of 3.25%, were placed at a repurchase rate of 3.359%, which is 13 basis points above the midswap and 67.7 basis points more than the German bond -considered the safest of the eurozone – at the same term.

Most of the issuance was placed among investors from the United Kingdom (28.9%), France (13.7%), Germany (10%), the Nordic countries (9.6%) and Italy (9.4%), mainly fund managers ( 37.9%), according to the data provided by the Commission.

Commerzbank, Goldman Sachs Bank Europe, HSBC Continental Europe, Morgan Stanley Europe and Societe Generale acted as lead banks in the transaction.

“We are pleased to have completed another successful transaction amid volatile market conditions,” said European Budget Commissioner Johannes Hahn in a statement.

With this transaction, the Commission has already raised €30 billion in the markets so far this year, close to 40% of its €80 billion funding target for the first half of the year.

Of this financing, most (€70,000 million) will go to the recovery fund, which will mobilize around €800,000 million between 2021 and 2026; while the remaining €10,000 million will serve to provide assistance to Ukraine to cover its most urgent financial needs, within the package of €18,000 million that the EU has agreed to disburse in 2023 for this purpose.


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