PRESS RELEASE : European Commission raises a further €11 billion for NextGenerationEU and to support Ukraine [October 2022]
The press release issued by the European Commission on 11 October 2022.
The European Commission has today issued €11 billion in a dual tranche transaction, the proceeds of which will be used to support Ukraine under the EU’s MFA programme and Europe’s recovery under the flagship NextGenerationEU programme. The deal consisted of a €5 billion tap of the 7-year bond due on 4 December 2029 and a new 20-year bond of €6 billion due on 4 November 2042.
Commissioner in charge of Budget and Administration, Johannes Hahn, said: “EU funding is a concrete expression of solidarity with Ukraine and Member States recovering from the pandemic. Today, we have successfully and under challenging market conditions raised a further €11 billion. Of them, €2 billion will be released swiftly to help Ukraine in this war of aggression on European soil.”
From the funds raised through the sale of the new 20-year bond, €2 billion will be granted as loans to Ukraine. This will be the first instalment of the €5 billion in macro-financial assistance (MFA) loans to Ukraine agreed on 20 September 2022.
With today’s transaction, the Commission has issued a total of €86.6 billion in long-term funding under NextGenerationEU in 2022 and €157.6 billion since the start of the programme in June 2021. Of this total, €36.6 billion have been issued since July 2022. This represents 73% of the Commission’s NextGenerationEU funding target for the second half of the year, with further transactions – both auctions and syndications – planned for late October, November and possibly December 2022, as per the funding plan published in June 2022.
Following today’s transaction, the Commission has so far raised €3 billion under its MFA programme for Ukraine in the second half of the year, on top of €1.2 billion earlier in 2022. This will be followed by further loans to Ukraine in the coming weeks. This has been part of the extraordinary support of €19 billion secured by Team Europe for Ukraine to date.
On the basis of the funds raised, the Commission has so far paid out nearly €113 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
NextGenerationEU is a temporary recovery instrument of more than €800 billion in current prices to support Europe’s recovery from the coronavirus pandemic and help build a greener, more digital and more resilient Europe.
To finance NextGenerationEU, the Commission – on behalf of the EU – is raising from the capital markets up to around €800 billion between now and end-2026.
In parallel to NextGenerationEU, the Commission runs several back-to-back funding programmes to finance the specific needs of the EU Member States and third countries. This includes the macro-financial assistance programme, under which the Commission is currently providing support to Ukraine, among others.
| Today’s bond syndication
7-year tap The 7-year bond carries a coupon of 1.625% and came at a re-offer yield of 3.026% providing a spread of -21 bps to mid-swaps, which is equivalent to +88.3 bps over the 7-year Bund due in August 2029 and to 47.8 bps over the 7-year OAT due in November 2029. The final order book was of €13.9 billion. 20-year bond The 20-year bond carries a coupon of 3.375% and came at a re-offer yield of 3.404% providing a spread of +32 bps to mid-swaps, which is equivalent to 101.7 bps over the 22-year Bund due in July 2044 and to 20.2 bps to the 21-year OAT due in May 2043. The final order book was of €26 billion. The joint lead managers of this transaction were Barclays, BofA Securities, Deutsche Bank, J.P. Morgan, and NatWest Markets. |
7-year tap
| Investor type | |
| Bank Treasuries | 54% |
| Fund Managers | 26% |
| Insurance and Pension Funds | 5% |
| Central Banks / Official Institutions | 8% |
| Banks | 6% |
| Hedge Funds | 1% |
| Grand Total | 100% |
| Geography | |
| France | 15% |
| UK | 27% |
| Other Europe | 12% |
| Germany | 7% |
| Italy | 11% |
| Iberia | 10% |
| Rest of World | 0% |
| Benelux | 3% |
| Nordics | 6% |
| Switzerland | 6% |
| Asia | 3% |
| Grand Total | 100% |
20-year bond
| Investor type | |
| Bank Treasuries | 31% |
| Fund Managers | 39% |
| Insurance and Pension Funds | 18% |
| Central Banks / Official Institutions | 5% |
| Banks | 6% |
| Hedge Funds | 1% |
| Grand Total | 100% |
| Geography | |
| France | 20% |
| UK | 8% |
| Other Europe | 12% |
| Germany | 13% |
| Italy | 9% |
| Iberia | 8% |
| Rest of World | 15% |
| Benelux | 9% |
| Nordics | 4% |
| Switzerland | 2% |
| Asia | 0% |
| Grand Total | 100% |
