Successful third issuance of EU SURE bonds by the European Commission

(Credit: Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has issued a €8.5 billion social bond under the EU SURE instrument to help protect jobs and keep people in work. This has been the third bond issuance this year under the programme. It consisted of a single tranche due for repayment in November 2035. There was very strong investor interest in this highly rated instrument, and the bond was over 13 times oversubscribed. This was translated into favourable pricing terms which means that Member States will receive more in loans than they will have to repay.

Commissioner Johannes Hahn in charge of Budget and Administration said: “This is the third time the Commission has gone to the markets to borrow under SURE and the third time we have received a strong vote of confidence and support by investors. I am confident that we will continue in the same spirit in 2021, both under SURE and under NextGenerationEU, borrowing the funds and reusing it for a better Europe.”

The 15-year social bond was extremely well received by the capital markets, having attracted the largest-ever order book for any single tranche benchmark issuance, and turning into the largest 15-year deal size by a supranational issuer to date. The deal’s success is a testament to the wide-spread support from the international investor community for the EU’s SURE programme.

The bond was priced at a negative yield of -0.102 %. This means that for every €102 that Member States get, they pay back €100. This negative interest rate advantage is therefore passed on straight to the Member States receiving the loans in the form of back-to-back lending. (See here for more details on the pricing of the transaction).

The banks that supported the European Commission with this transaction (“joint bookrunners”) were Citigroup, HSBC, J.P. Morgan, LBBW and Société Générale.

Following disbursements of the proceeds of this bond, 15 EU Member States will have received €40 billion from three transactions in the period from late-October to end-November.

The Commission will proceed with further issuances under the EU SURE programme in 2021, up to the maximum available ceiling of €100 billion.

In 2021, the Commission is due to also launch the borrowing under NextGenerationEU, the temporary recovery instrument of €750 billion to help build a greener, more digital and more resilient Europe.

Background

The Commission has so far proposed to make €90.3 billion in financial support available to 18 Member States. So far, the Commission has disbursed a total of €31 billion to 10 EU Member States following two EU SURE issuances: Croatia, Cyprus, Greece, Italy, Latvia, Lithuania, Malta, Poland, Slovenia and Spain.

On 20 October, the European Commission issued its inaugural social bond under the EU SURE instrument. The issuing consisted of two bonds, with €10 billion due for repayment in October 2030 and €7 billion due for repayment in 2040, both of which were more than 13 times oversubscribed, resulting in favourable pricing terms.

On 10 November, the European Commission issued social bonds for the second time under the EU SURE instrument, for a total value of €14 billion. The issuing consisted of two bonds, with €8 billion due for repayment in November 2025 and €6 billion due for repayment in November 2050. The issuance has received an overwhelming response in the capital markets and the bonds were 13 and 11.5 times oversubscribed, respectively for the 5- and 30-year tranche, again entailing very favourable pricing terms.

The bonds issued by the EU under SURE benefit from a social bond label. This provides investors with confidence that the funds mobilised will serve a truly social objective.

The funds raised are being transferred to the beneficiary Member States in the form of loans to help them cover the costs directly related to the financing of national short-time work schemes and similar measures as a response to the pandemic.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This is the environmental catastrophe you’ve probably never heard of

Electronic cigarettes, a better alternative or a well-advertised product

Parmesan cheese on shelves in Italy (Copyright: European Union, 2014 / Source: EC - Audiovisual Service / Photo: Daniela Giusti)

CETA at risk again: Italy says it won’t ratify EU-Canada trade deal over product protection fears

ECB’s unconventional monetary measures give first tangible results

Cleaner Air in 2020: 0.5% sulphur cap for ships enters into force worldwide

Antimicrobial resistance: how can an intersectoral approach between society and healthcare professionals be developed and applied?

6th Edition of India m2m + iot Forum to open its door on 14th January, in association with The European Sting

Why press freedom should be at the top of everyone’s agenda

UN chief saddened at news of death of former US President George H.W. Bush

Cum-ex tax fraud scandal: MEPs call for inquiry, justice, and stronger tax authorities

Davos on Climate Change: citizens demanding more actions while CEOs tried to balance profit with sustainability

Mobility package: Parliament adopts position on overhaul of road transport rules

This top-10 of business risks misses the biggest of them all: climate change

Nepal faces a crisis as COVID-19 stems the flow of remittances

Fairness in the Food Supply Chain: Commission welcomes Member States’ support for greater price transparency

Can we automate our way out of the savings crisis?

Climate action: 4 shifts the UN chief encourages Governments to make

Around 23 million boys have married before reaching 15; ‘we can end this violation’ says UNICEF chief

The multidisciplinary team facing the multidrug resistant form of Tuberculosis in the state of Amazonas (Brazil)

EU and U.S. castigate Facebook on Cambridge Analytica scandal as citizens’ data privacy goes down the drain again

Humans have caused this environmental crisis. It’s time to change how we think about risk

What is hydroponics – and is it the future of farming?

Mental health in medical students: the deciphered quandary

UN chief condemns air strike that hit school bus in northern Yemen, killing scores of children

The European Parliament double-checks the EU 2014-2020 budget

What you need to know about the Sustainable Development Impact Summit

How to help an ageing population stay wealthy for longer

One million facing food shortages, nutrition crisis after Mozambique cyclones: UNICEF

UNICEF chief hopes 2020 will be ‘a year of peace’ for Syria’s children

Polluted lungs: health in the center of environment discussion

MEPs want the EU to play a stronger role in improving public health

Can we put a price on clean air? Yes, we can

Commission introduces surveillance of imports of bioethanol, and remains open to examining requests from other sectors

The European Brain Drain: a truth or a myth?

In this Tokyo cafe, the waiters are robots operated remotely by people with disabilities

How can we produce enough protein to feed 10 billion people?

Reforms in a few countries drive a decline in average OECD labour taxes

Western Sahara: a ‘peaceful solution’ to conflict is possible, says UN envoy

The first new university in the UK for 40 years is taking a very different approach to education

This is what a Green New Deal for Europe could look like

How UN cultural treasures helped set the stage for Game of Thrones

Parliament boosts consumer rights online and offline

Militias force nearly 2,000 to leave Libyan capital’s largest shelter for internally-displaced: UNHCR

Key quotes from China’s Premier Li on COVID-19, the economy and US relations

EU Citizenship: New survey shows EU citizens are more aware of their rights

FROM THE FIELD: South Sudan’s green shoots, highlight environmental recovery from war

UN chief hails victory of ‘political will’ in historic Republic of North Macedonia accord

We have a space debris problem. Here’s how to solve it

Hiring more female leaders is good for profits. Here’s the evidence

Why we need to solve our quantum security challenges

70 years on, landmark UN human rights document as important as ever

Righting a wrong: UN Fund helps thousands of sex abuse survivors rebuild their lives

What the future holds for the EU – China relations?

As human genome editing moves from the lab to the clinic, the ethical debate is no longer hypothetical

Companies have a new skill to master – innovation

Why 2020 will see the birth of the ‘trust economy’

The Italian crisis may act as a catalyst for less austerity

Foreign direct investments the success secrete of Eurozone

What makes America the world’s most competitive economy?

Climate Change and Human Health: Two Faces of The Same Coin

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s