Chapter News, COVID-19 News

NextGenerationEU: European Commission raises €20 billion in first transaction to support Europe’s recovery

On June 15, the European Commission, in its first NextGenerationEU transaction, raised a €20 billion via a ten-year bond due on 4 July 2031 to finance Europe’s recovery from the coronavirus crisis and its consequences. This is the largest-ever institutional bond issuance in Europe, the largest-ever institutional single tranche transaction and the largest amount the EU has raised in a single transaction.

The bond has attracted a very strong interest by investors across Europe and the world, thanks to which the Commission has obtained very favourable pricing conditions, similarly to the repeatedly successful issuances under the SURE programme.

European Commission President Ursula von der Leyen said: Today is a truly historic day for our European Union. We successfully conducted the first funding operation for NextGenerationEU. As a strong Union, we are raising money at the markets together and investing in a common recovery from this crisis. It is an investment in our single market. And even more importantly, it is an investment in the future of Europe’s next generations as they face the challenges of digitisation and climate change. Money can now start flowing to help reshaping our continent, to build a greener, more digital and more resilient Europe. I will now visit every Member State, to see NextGenerationEU impact on the ground.”

Commissioner in charge of Budget and Administration, Johannes Hahn, said: Today, we have reached a key milestone in implementing NextGenerationEU. After laying all the foundation at record speed, we have today successfully conducted the first borrowing operation under the Recovery Plan. This is just a very first step of a long journey, bringing over €800 billion in current prices into the EU economy. NextGenerationEU has now become a reality and is set to drive our collective recovery from the pandemic, setting Europe on a green, digital and resilient path.”

The funds will now be used for the first payments under NextGenerationEU, under the Recovery and Resilience Facility and various EU budget programmes.

By the end of 2021, the Commission expects to raise some €80 billion in bonds, to be complemented by short-term EU-Bills, as per the funding plan published in June 2021. The exact amount of both EU-Bonds and EU-Bills will depend on the precise funding needs, and the Commission will revise its initial assessment in the autumn. In this way, the Commission will be able to fund, over the second half of the year, all planned grants and loans to Member States under the Recovery and Resilience Facility, as well as cover the needs of the EU policies that receive NextGenerationEU funding.


NextGenerationEU is a temporary recovery instrument of some €800 billion in current prices to support Europe’s recovery from the coronavirus pandemic and help build a greener, more digital and more resilient Europe.

To finance NextGenerationEU, the European Commission – on behalf of the EU – will raise from the capital markets up to around €800 billion between now and end-2026. €407.5 billion available for grants (under RRF and other EU budget programmes); €386 billion for loans. This will translate into borrowing volumes of an average of roughly €150 billion per year.

Given the volumes, frequency and complexity of the borrowing operations ahead, the Commission will follow the best practices used by large and frequent issuers, and implement a diversified funding strategy.

This strategy presents a diverse range of instruments and techniques, going beyond the back-to-back approach that the Commission has used so far to borrow from the markets, including in the framework of the SURE programme. Over the past 40 years, the European Commission has run several lending programmes to support EU Member States and third countries. All of these lending operations were financed on a back-to-back basis, mainly through syndicated bond issuances.

Technical section

The new 10-year bond carries a coupon of 0% and came at a re-offer yield of 0.086% providing a spread of -2 bps to mid-swaps, which is equivalent to 32.3 bps over the 0.00% Bund due 02/2031.

The final order book was in excess of €142 billion, which meant that the bond has been over seven times oversubscribed.

The joint lead managers were BNP Paribas, DZ BANK, HSBC, IMI-Intesa Sanpaolo and Morgan Stanley. Co-leads were Danske Bank and Santander.

The demand was dominated by fund managers (37%), and bank treasuries (25%) followed by central banks / official institutions (23%). In terms of region, 87% of the deal was distributed to European investors, 10% to Asian investors and 3% Investors from the Americas, the Middle East and Africa.

Summary of the distribution:

By Geography

Germany 13%
France 10%
UK 24%
Benelux 15%
Nordics 10%
Italy 5%
Other Europe 10%
Asia 10%
Americas 3%
Total 100%

By Investor Type

Central Banks / Official Institutions 23.0%
Fund Managers 37.0%
Insurance and Pension Funds 12.0%
Bank Treasuries 25.0%
Banks 2.0%
Hedge Funds 1.0%
Total 100%

Compliments of the European Commission.