EU €4bn bond sale attracts record bids of €73bn

The European Commission, which issues EU-Bonds on behalf of the EU, said it successfully completed its eighth syndicated transaction since the beginning of the year, raising a total of €4 billion.

The single tranche transaction consisted of a tap of EU’s 30-year bond due on October 4, 2052.

The transaction was the first under the funding plan for the second half of 2023, a period over which the Commission intends to raise €40 billion in long-term funding.

Investor demand for EU-Bonds was extremely strong, with the transaction drawing bids of over €73 billion overall, an oversubscription rate of over 18 times – the highest recorded in an EU syndication.

“Due on 4 October 2052, this bond carries a coupon of 2.5% and came at a re-offer yield of 3.422% equivalent to a reoffer price of 83.131%,” said the Commission.

“The spread to mid-swap is +66 bps, which is equivalent to +87 bps over the Bund due on 15 August 2052 and +1.8 bps over the OAT due in 25 May 2052.

“The final order book was of over €73 billion.

“The joint lead managers of this transaction were Barclays, BNP Paribas, Citi, LBBW and NatWest.”

The proceeds of this transaction will be used for the NextGenerationEU recovery programme and the Macro-Financial Assistance+ programme for Ukraine, in line with the Commission’s approach of issuing single branded EU-Bonds rather than separately labelled bonds for individual programmes.

Commissioner for Budget and Administration Johannes Hahn said: “We started the second half of the year’s funding programme with a bang – 18 times over-subscription for the €4 billion tap of our 30-year bond.

“The strength of today’s deal confirms the solid demand for EU long dated bonds.

“This deal gives us great confidence as we continue our mission of funding Europe’s green and digital transition under NextGenerationEU and providing steady support to Ukraine under MFA+.”