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After Italy, Spain and the other European countries which have had their fill of requests since the beginning of the year to place public securities for over 120 billion euros, the European Union could not miss the call. The Commission, on the verge of becoming one of the main issuers at an international level to raise funds mainly intended for the NextGenerationEU plan, has placed bonds for 8 billion euros with a maturity of 7 and 30 years in what is the first syndicated operation of 2024 And it did so, according to the indications of the banks that participated in the operation, obtaining overall requests for 180 billion and therefore confirming that it was able to attract the interest of sovereign investors on a par with (if not even more than) traditional investors. sovereign issuers.
The operation of the commission
Also for this reason the EU bonds (in both cases these are reopenings) were priced favorably compared to the initial indications, with a yield of 2.781% (11 basis points more than the midswap rate, when it started from 14) for the 3 billion of bonds maturing in December 2030 and 3.678% (85 basis points on the midswap instead of 87) for the 5 billion of bonds in March 2053. The rates are slightly higher than those of the debt of countries that analysts define as semi-core and to which they could be compared: for the seven-year period they are about 10 cents more than Austria, 20 on France and 30 on Holland. This is a gap that is generally associated with the limited liquidity that Eu-bonds have on the secondary market, as they are generally held by institutional investors with a long-term perspective.
A long-term plan
Yet the quantity of Brussels-branded bonds is gradually becoming more and more significant: last year, medium-long term instruments worth 115.9 billion were issued, 12.5 billion of which were Ngeu Green Bonds. To these, according to the guidelines published in December by the Commission, a further 75 billion should be added scheduled for the first half of 2024 and probably a very similar amount in the second part of the year. And it is precisely on the basis of the funds raised starting from 2021 through these instruments (from January 2023 all brought together under the single Eu-Bond brand) that it has so far been possible to provide 175.6 billion in grants and loans to EU member states within the Pnrr, as well as providing further support to other community programs benefiting from NextGenerationEU funding.
The appeal of Macron and Gentiloni
The issue of how to finance European public debt remains very topical even among politicians. After the invitation of the French president, Emmanuel Macron, who last week at the World Economic Forum in Davos had asked the EU for “greater investments”, leveraging Eurobonds for some common strategic “major priorities”, yesterday it was the turn of Paolo Gentiloni. «Europe’s investment challenges will not end with the conclusion of the Pnrr in 2026 and InvestEu in 2027», said the EU Commissioner during a conference in Brussels, explaining that «the changing economic and geopolitical panorama forces to increase investments in strategic industries, security, defense and reconstruction of Ukraine” and adding above all that “the reflection on how to finance these common European priorities within the EU’s multiannual budget must start now”.
2024-01-23 18:57:30
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