PRESS RELEASE : European Commission issues a new €6 billion NextGenerationEU green bond and raises an additional €2.5 billion to support Ukraine [November 2022]
The press release issued by the European Commission on 15 November 2022.
The European Commission has today issued a further €8.5 billion, of which €6 billion through a NextGenerationEU green bond for its recovery programme and €2.5 billion to support Ukraine under the emergency MFA programme put forward following Russia’s war of aggression against the country. The NextGenerationEU green bond has a 10-year maturity, due on 4 February 2033, and the MFA bond a 30-year maturity, due on 4 March 2053.
With today’s green bond, the Commission has issued a total of €35.5 billion of NextGenerationEU green bonds to finance green projects under EU Member States’ Recovery and Resilience plans.
Overall, the Commission has issued a total of €96.5 billion in long-term funding under NextGenerationEU in 2022 and €167.5 billion since the start of the programme in June 2021. Of this total, €46.5 billion have been issued since July 2022. This represents 93% of the Commission’s NextGenerationEU funding target for the second half of the year, with further transactions planned to year end as per the funding plan published in June 2022.
As regards the proceeds from the 30-year bond, they will be used to finance the latest instalment of macro-financial assistance (MFA) loans to Ukraine. So far in 2022, the Commission has raised €6.7 billion to finance MFA loans to Ukraine. Today’s transaction follows the disbursement of €1.2 billion in the first half of the year, €1 billion in August and €2 billion in October. A further €500 million is foreseen before year-end.
For 2023, once approved, the up to €18 billion support package the Commission proposed on 9 November 2022 will provide further highly concessional loans, to be disbursed in regular instalments. If the legislative package proposed on 09 November is adopted, the Commission will borrow on capital markets using the systems and processes that it uses to finance NextGenerationEU.
On this basis, the Commission has so far paid out nearly €136.55 billion under the Recovery and Resilience Facility and, as of end-June, over €15 billion under other EU programmes which benefit from NextGenerationEU financing. The Commission will continue to use the funds raised to support Europe’s post-pandemic recovery, financing Member States under the Recovery and Resilience Facility as well as via other EU programmes.
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, of up to around €800 billion, which seeks to support Europe’s recovery from the coronavirus pandemic through investments in sustainability, digital solutions and resilience.
Under its MFA programme, the Commission provides loans to countries outside of the European Union. Ukraine has been by far the largest beneficiary of this programme in 2022.
| Today’s bond syndication
10-year bond The 10-year bond carries a coupon of 2.75% and came at a re-offer yield of 2.82% providing a spread of 1 bp to mid-swaps, which is equivalent to +72.4 bps over the 10-year Bund due in August 2032 and to 23 bps over the 10-year OAT due in November 2032. The final order book was €42 billion. 30-year bond The 30-year bond carries a coupon of 3.000% and came at a re-offer yield of 3.065% providing a spread of +74 bps to mid-swaps, which is equivalent to 101.9 bps over the 30-year Bund due in August 2052 and to 17.6 bps to the 30-year OAT due in May 2053. The final order book was €29 billion. The joint lead managers of this transaction were Credit Agricole Corporate and Investment Bank, Goldman Sachs Bank Europe, Landesbank Baden-Württemberg, Morgan Stanley Europe and UniCredit Bank. |
10-year bond:
| Investor type | |
| Bank Treasuries | 46.4 % |
| Fund Managers | 24.9 % |
| Central Banks / Official Institutions | 16.4 % |
| Insurance and Pension Funds | 6.5 % |
| Banks | 4.6 % |
| Hedge Funds | 1.2 % |
| TOTAL | 100% |
| Geography | |
| Benelux | 19.2 % |
| Germany | 16.7 % |
| France | 14.3 % |
| UK | 13.2 % |
| Southern Europe | 8.8 % |
| Nordics | 8.0 % |
| Italy | 7.6 % |
| Asia | 6.2 % |
| Austria | 2.8 % |
| Switzerland | 2.1 % |
| Rest of World | 0.6 % |
| Other Europe | 0.5 % |
| TOTAL | 100% |
30-year bond:
| Investor type | |
| Fund Managers | 33.7 % |
| Bank Treasuries | 32.8 % |
| Insurance and Pension Funds | 17.0 % |
| Central Banks / Official Institutions | 8.9 % |
| Banks | 5.9 % |
| Hedge Funds | 1.7 % |
| TOTAL | 100% |
| Geography | |
| Germany | 21.6 % |
| UK | 18.2 % |
| France | 15.0 % |
| Southern Europe | 13.3 % |
| Benelux | 13.1 % |
| Italy | 7.5 % |
| Nordics | 4.4 % |
| Switzerland | 2.4 % |
| Rest of World | 2.1 % |
| Other Europe | 1.3 % |
| Austria | 1.1 % |
| TOTAL | 100% |
