WIREDGOV

The European Commission yesterday, in its second NextGenerationEU transaction, raised €15 billion to finance Europe's recovery from the coronavirus crisis and its consequences. This was a dual-tranche transaction, consisting of a €9 billion 5-year bond due on 6 July 2026 and a €6 billion 30-year bond due on 6 July 2051.

Both tranches attracted a very strong interest by investors across Europe and the world. The transaction was more than 11 times oversubscribed and with bids exceeding €170 billion. As a result, the Commission has obtained very favourable pricing conditions, building on the successful first NextGenerationEU issuance earlier this month and the excellent performance of the SURE programme.

Commissioner in charge of Budget and Administration, Johannes Hahn, yesterday 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.”

This is the second transaction under the NextGenerationEU programme, following the €20 billion 10-year bond that the Commission issued on 15 June 2021 on behalf of the EU. The first bond was the largest-ever institutional bond issuance in Europe, the largest-ever institutional single tranche transaction and the largest amount the EU has raised in a single transaction.

Following yesterday's transaction, the 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 and various EU budget programmes financed by NextGenerationEU. The first disbursement under NextGenerationEU took place already recently (Monday). On 28 June, the Commission disbursed €800 million to REACT-EU. This programme finances targeted measures for the green and digital transitions to quickly address the negative consequences of the outbreak, for example, through investments in energy efficiency, urban greening and digitalisation.

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.

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