EU Raises EUR20 Billion in Inaugural 10-Year NextGenerationEU Bond -- Update
(Adds final pricing, further comments from analysts)
--The EU's inaugural NGEU bond issue received robust demand
--The bloc is on track to become the largest supranational
--The large issuance program means the EU will have permanent
market presence in the coming years
By Emese Bartha
The EU raised 20 billion euros ($24.24 billion) in the inaugural
issue of NextGenerationEU bonds on Tuesday in a step toward
establishing itself as the largest supranational issuer.
Order books for the issue of 0% July 2031-dated bonds closed in
excess of EUR142 billion, including EUR4 billion of joint lead
manager demand, said one of the lead managers. The spread on the
bond was set two basis points below mid-swaps, said the same bank.
The bond was priced at 99.141, at a reoffer yield of 0.086%.
"The maturity choice and some concession likely helped support
the deal, together with fundamental strength of the issuer," said
Peter Allen Goves, fixed-income research analyst at MFS Investment
Management. "The strength of demand (noting the large order book)
serves further to illustrate the interest in Aaa[-rated] assets
offering a spread to Germany," he said.
"This strong demand is justified by the interesting premium that
the issue had versus others with similar risk," said Filipe Silva,
director of asset management at Banco Carregosa.
The NGEU issuance follows nearly EUR90 billion issuance in seven
bond transactions in the course of seven months for SURE, the EU's
support program to mitigate unemployment related to the coronavirus
pandemic. SURE bonds were issued in social bond format.
The EU plans to raise around EUR80 billion in long-term bonds in
2021 to finance the NGEU--the EU's Recovery Fund--and further tens
of billions of euros in bills. Two more syndicated transactions are
expected before the end of July, while starting September, the EU
will alternate syndicated issues with auctions. By the end of 2026,
the EU plans to raise around EUR800 billion from investors for the
NGEU, including up to EUR250 billion in green bonds.
"Along the way, the EU will also become the world's largest
green bond issuer and underpin its claim of sustainable
transformation of the financial markets," said Christian Kopf, head
of fixed-income portfolio management at German asset manager Union
The strong demand for the bond "underlines the attractiveness of
the EU as a safe haven on the capital market," Mr. Kopf added.
"Given the size of the [NGEU] program, the EU looks set to grow
in its market prominence within the high quality fixed income
space," MFS IM's Mr. Goves said.
Joint lead managers of the issue were BNP Paribas, DZ Bank,
HSBC, IMI-Intesa Sanpaolo and Morgan Stanley, with Danske Bank and
Santander acting as co-lead managers.
Write to Emese Bartha at firstname.lastname@example.org
(END) Dow Jones Newswires
June 15, 2021 09:58 ET (13:58 GMT)
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