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There’s a new kid in debt town, with the closest thing so far to a true "euro bond” about to be sold in prodigious size to pay for the European Union’s new €750 billion ($869 billion) pandemic fund. It will represent a challenge to Europe’s undisputed credit-market champion: the German bund.

Germany’s government bonds have long been the continent’s benchmark for quality. They’re the equivalent to U.S. Treasuries as offering the safest collateral — and are regarded essentially as risk free. But the new EU bonds, to be sold and managed by the European Commission, will provide an alternative, and one that investors will welcome.

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