The waiting’s over. The European Union has fired the gun on its multiyear bond issuance to fund the €750 billion ($900 billion) pandemic recovery fund that the bloc agreed last summer.
Tuesday saw the launch of a benchmark 10-year deal and it met a rapturous investor reception. The offering was double what was expected, at €20 billion, and offers a yield a few basis points above zero — about 6 or 7 basis points. That’s about 30 basis points more than equivalent German debt. The order book was for a positively eye-watering €142 billion. A big new beast has arrived in the bond market.
The EU’s sales of €200 billion or more per year will rival the national issuance of Europe’s big four sovereign issuers: Germany, France, Italy and Spain. The bonds will reshape European capital markets, not least because a third of them will be green debt, adding hugely to the liquidity of that market and setting an example for national governments and corporates to follow.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.