European Commission raises a further €6 billion in its third syndicated transaction for 2023

The European Commission has today raised a further €6 billion of EU-Bonds in its third syndicated transaction for 2023. The single tranche transaction consisted of a bond due on 4 July 2034.

Investor demand for EU-Bonds remained strong, with the transaction drawing bids of over €54 billion in aggregate, making for an oversubscription rate of about 9 times.

Today's syndicated transaction was the third under the unified funding approach that the Commission introduced as its main funding method as of January 2023. Under this approach, the Commission – on behalf of the EU – is issuing single branded “EU-Bonds” rather than separately labelled bonds for individual programmes.

With today's transaction, the Commission has raised €30 billion out of its €80 billion funding target for the first half of 2023. Out of the €80 billion funding target, some €70 billion will be directed to the NextGenerationEU recovery programme, and around €10 billion to the Macro-Financial Assistance+ programme for Ukraine.

A detailed overview of the planned transactions under the unified funding approach for the first half of 2023 is available in the EU funding plan.

Background

The European Commission is borrowing on international capital markets on behalf of the European Union and disbursing the funds to Member States and third countries under various borrowing programmes.

Its largest programme is NextGenerationEU, whose objective is to support Europe's recovery from the coronavirus pandemic with up to around €800 billion in investments in Europe's sustainability, digital solutions and resilience. To date around €144 billion has already been disbursed to EU countries under the Recovery and Resilience Facility. Further support has been provided to other EU programmes benefitting from NextGenerationEU funding.

The Macro-Financial Assistance + programme of €18 billion is providing stable and predictable support to Ukraine throughout 2023. The European Commission – on behalf of the EU – already disbursed the first €3 billion under the programme on 17 January 2023. This programme follows the disbursement of €7.2 billion by the Commission in emergency MFA loans to Ukraine in 2022. Prior to that, the EU had provided over €5 billion to Ukraine through five MFA programmes since 2014.

The unified funding approach to borrowing allows the financing instruments developed for NextGenerationEU to be used in the same way for other lending programmes. On that basis, EU programmes financed via borrowing can be funded in a flexible manner, relying on the proceeds of a single scheme of EU-Bills and EU-Bonds transactions. This approach is also expected to make EU securities more fungible and liquid.

To further boost the liquidity of EU-Bonds, the Commission is preparing a framework for providing investors with pricing quotes on EU securities, and is starting to build a repo facility to support market participants in trading its bonds, which will be implemented by early 2024.

Tap of a 11-year EU-Bond: