The waiting’s over. The European Union has fired the gun on its multiyear bond issuance to fund the €750 billion ($900 billion) pandemic recovery fund that the bloc agreed last summer.
Tuesday saw the launch of a benchmark 10-year deal and it met a rapturous investor reception. The offering was double what was expected, at €20 billion, and offers a yield a few basis points above zero — about 6 or 7 basis points. That’s about 30 basis points more than equivalent German debt. The order book was for a positively eye-watering €142 billion. A big new beast has arrived in the bond market.
The EU’s sales of €200 billion or more per year will rival the national issuance of Europe’s big four sovereign issuers: Germany, France, Italy and Spain. The bonds will reshape European capital markets, not least because a third of them will be green debt, adding hugely to the liquidity of that market and setting an example for national governments and corporates to follow.