The European Commission has successfully raised €7 billion through a landmark dual-tranche bond issuance, demonstrating overwhelming investor confidence with oversubscription rates of 17x for the 7-year bond and 27x for the 18-year green bond. This highly successful transaction moves the EU closer to its €65 billion funding target for the second half of 2024 and reinforces its commitment to sustainable investments and recovery initiatives.
Key Transaction Highlights
The issuance included two significant tranches:
- €4 billion 7-year bond: Maturing on December 4, 2031, with a 2.5% coupon and a re-offer yield of 2.719%.
- €3 billion 18-year green bond: Maturing on February 4, 2043, with a 1.25% coupon and a re-offer yield of 3.260%.
Both bonds saw exceptional demand, reflecting investor confidence in EU-backed initiatives. Joint lead managers for the transaction were Bank of America, CA-CIB, Deutsche Bank, HSBC, and Nomura.
Strong Green Bond Focus
Out of the €7 billion raised, €3 billion will be directed toward financing green projects across the EU. These funds will be allocated under the NextGenerationEU (NGEU) Green Bond Framework, supporting the EU’s green transition efforts in line with the International Capital Market Association’s Green Bond Principles.
This issuance marks the EU’s 10th syndicated bond transaction of 2024 and brings it closer to its strategic funding goals for vital EU programs, including national Recovery and Resilience Plans (RRPs), support for Ukraine, and sustainability-focused green projects.
Use of Proceeds
The funds raised will support several EU initiatives:
- NextGenerationEU Recovery and Resilience Plans (RRPs), which include critical national recovery programs across EU Member States.
- Support for Ukraine, with over €10 billion already disbursed in 2024 under the Ukraine Facility.
- Advancing Green Projects, in line with the EU’s sustainability targets and commitments under the NGEU Green Bond Framework.
As noted by the European Commission, “Today’s €7 billion transaction demonstrates the EU’s ability to meet funding needs efficiently while adhering to the highest sustainability standards.”
Milestone Achievements
- Cumulative Issuance: The EU has raised €426.58 billion under its unified funding approach, with nearly €262 billion disbursed under the Recovery and Resilience Facility.
- Outstanding Debt: The EU’s total outstanding debt now stands at €596.46 billion, including €22 billion in EU Bills.
Looking ahead, the next major event in the EU’s funding calendar is an EU Bond auction scheduled for November 25, 2024. The EU also provides regular updates, including green bond impact reports, available on the NGEU Green Bond Dashboard.
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