© Reuters. The EU raises 5,000 million over 30 years for Ukraine and the recovery fund
Brussels, Jan 24 (.).- The European Commission placed 5,000 million euros this Tuesday with the issuance of a 30-year bond whose proceeds will be used to mainly finance both the disbursements of the post-pandemic recovery fund and the financial aid program for Ukraine .
Investor purchase orders reached 51,000 million euros, representing a demand ten times higher than that finally captured, according to the Community Executive in a statement.
The bond, maturing on March 4, 2053, has a coupon of 3% and a repurchase interest rate of 1.132%, which implies a premium of 86 basis points with respect to the mid-swap of 97.7 points. basic with the German ‘bund’ with the same maturity.
The financial entities that acted as co-lead banks in the issuance were BNP Paribas (EPA:), JP Morgan (NYSE:), NatWest Markets, Nomura y Unicredit (BIT:).
Almost a year ago, in February 2022, the Community Executive raised another 5,000 million at 30 years in a syndicated issue in which the resulting coupon was 0.7% and the yield in the secondary market was 1.021%.
This fact reflects the consequences on the performance of the public debt of the various rate hikes adopted by the European Central Bank (ECB) to combat inflation. Since July, the issuing institute has raised interest rates from 0% to 2.50% and it is expected to continue with increases at the February and March meetings.
With today’s issuance, the European Commission has already raised almost 10 billion of its target of 80 billion for the first half of this year. Of this figure, 70 billion will go to payments to member states under the recovery fund and about 10 billion will be transferred to Ukraine.
The operation is the first that Brussels carries out following a “unified” financing approach, according to which the institution issues debt under a single brand called ‘EU Bonds’ instead of naming the debt it issues according to the program it is going to finance.
(More information on the European Union at euroefe.euractiv.es)