With today’s transaction, the European Commission has so far raised € 35 billion under NextGenerationEU
The European Commission today, i.e., Wednesday, June 30, 2021, raised € 15 billion, under the second NextGenerationEU transaction, to finance the economic recovery of European nations from the Coronavirus (COVID-19).
This was a dual-tranche transaction, consisting of a € 9 billion 5-year bond due on July 6, 2026 and a € 6 billion 30-year bond due on July 6, 2051. Both the tranches attracted a very strong interest by investors across Europe and the world.
Talking about investor sentiment, European Commission tweeted,
A strong vote of confidence from investors!
— European Commission 🇪🇺 (@EU_Commission) June 30, 2021
We just raised €15 billion to finance Europe's recovery – our second #NextGenerationEU transaction
The money raised will help build a greener, more digital and more resilient Europe.
Learn more → https://t.co/2weKiZjyeL pic.twitter.com/NH0AxM9NkH
Taking it to twitter, the President of European Commission – Ursula von der Leyen tweeted,
#NextGenerationEU is in motion!
— Ursula von der Leyen (@vonderleyen) June 29, 2021
The @EU_Commission has just completed its 2nd fund-raising operation on the capital markets.
€15 billion to finance Europe's recovery, with once again strong interest from investors worldwide! https://t.co/TRfjOWIiK1
Speaking on the occasion, the Commissioner in charge of Budget and Administration – Johannes Hahn, said, “This is the second time the Commission has gone to the markets to borrow under NextGenerationEU and again we have received a strong vote of confidence from our investors. I am glad that the money raised today will help build a greener, more digital and more resilient Europe.”
With today’s transaction, the European Commission has so far raised € 35 billion under NextGenerationEU. The funds will now be used for the first payments under the scheme, including under the Recovery and Resilience Facility (RRF). The European Commission has disbursed € 800 million to Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU), which intends to foster crisis repair capacities in the context of the COVID-19, as well as investments in operations contributing to preparing a green, digital and resilient recovery of the economy.
The 5-year bond carries a coupon of 0% and came at a re-offer yield of -0.335% providing a spread of -11 Basis Points (BPS) to mid-swaps, which is equivalent to +22 BPS over the 5-year bund due April 2026. The bond has been oversubscribed by 10 times and the final order book is in excess of € 88 billion.
The 30-year bond carries a coupon of 0.7% and came at a re-offer yield of 0.732% providing a spread of 22 Basis Points (BPS) to mid-swaps, which is equivalent to 39.9 BPS over the 30-year bund due August 2050. The bond has been oversubscribed by 14 times and the final order book is in excess of € 83 billion.
The joint lead managers for the bond issuance were Credit Agricole, Deutsche Bank, JP Morgan, UniCredit and Goldman Sachs. The BBVA and Erste bank acted as the co-lead managers.
By the end of 2021, the European Commission is looking to raise some € 80 billion in bonds. These will be complemented by short-term E.U.-Bills. The E.U. Bills are short-term securities with a shorter maturity of below 1 year.
The exact amount of both E.U.-Bonds and E.U.-Bills will depend on the precise funding needs and the Commission will revise its initial assessment in the autumn.
