Commission raises additional €10 billion under NextGenerationEU
The European Commission, on 13 July, issued a further €10 billion to support Europe's recovery from the coronavirus crisis and its consequences, in a 3rd NextGenerationEU bond. The Commission issued a 20-year bond due on 4 July 2041, which was welcomed by the market with a very strong interest, with books close to €100 billion.
Thanks to the almost 10-fold oversubscription – a demonstration of the ongoing strong interest by investors – the Commission has obtained very favourable pricing conditions, in line with the strong performance of the NextGenerationEU programme so far. This was a dual-tranche transaction, and the Commission raised a further €5.25 billion in a 10-year back-to-back loan due 22 April 2031 for its European Financial Stabilisation Mechanism (EFSM) and Macro-Financial Assistance (MFA) programmes.
This is the third transaction under the NextGenerationEU programme, following the €20 billion 10-year bond that the Commission issued on 15 June 2021 and the dual-tranche transaction of €15 billion – that consisted of a €9 billion 5-year bond and a €6 billion 30-year bond – from 29 June.
Following this transaction, the Commission has so far raised €45 billion under NextGenerationEU. The funds will now be used for the first payments under NextGenerationEU, under the Recovery and Resilience Facility and various EU budget programmes. The first disbursement under NextGenerationEU already took place at the end of June and was carried out under the REACT-EU programme. The first payments under the Recovery and Resilience Facility will follow in due course, after the approval by the Council of all the national Recovery and Resilience Plans and the signature of the respective financing and/or loan agreements by EU Member States and the European Commission.
This transaction has also raised €5 billion which will be used to extend financial assistance provided to Portugal and Ireland in the wake of the financial and sovereign debt crisis. A further €250 million has been raised to finance a loan to Jordan under the Macro-Financial Assistance programme.
By the end of 2021, the Commission expects to raise some €80 billion in bonds, to be complemented by short-term EU-Bills, as per the funding plan published in June 2021. The exact amount of both EU-Bonds and EU-Bills will depend on the precise funding needs, and the Commission will revise its initial assessment in the autumn. In this way, the Commission will be able to fund, over the second half of the year, all planned grants and loans to Member States under the Recovery and Resilience Facility, as well as cover the needs of the EU policies that receive NextGenerationEU funding.
Image © European Commission, 2021
27 October 2021
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