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A fanfare start for the EU's “corona bonds”

2020-10-20T17:19:08.171Z


The European Commission has raised 17 billion euros to finance a first tranche of its Sure program to support partial unemployment schemes in the Member States.


The European Union caused a sensation on the bond markets on Tuesday with its first mutualised loan intended to fight the coronavirus crisis.

The European Commission has raised 17 billion euros to finance a first tranche of its Sure program to support partial unemployment schemes in Member States, with a total envelope of 100 billion.

The issue greatly exceeded forecasts, with a record demand of 230 billion euros (13 times more than the amount borrowed).

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Investors were won over by the European Union's strong AAA rating and relatively attractive yields.

A first issue of 10 billion euros with a ten-year maturity should post an interest rate of -0.26%, negative, of course, but higher than comparable loans from Germany (-0.62%) or even from France (- 0.33%).

The remaining 7 billion will have a maturity of twenty years.

The banks Barclays, BNP Paribas, Deutsche Bank, Nomura and UniCredit were in charge of the transaction.

This successful bond issue is seen as an appetizer to Europe's debt program for next year.

The continued deployment of Sure and, above all, the first installments of the € 750 billion NextGenerationEU stimulus fund should once again attract market demand for safe investments.

The EU should thus raise around 200 billion euros in 2021, compared to its 50 billion credits currently in progress.

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Paris and Rome demand European "coronabonds" to finance the crisis

These debts are also supported by the asset buyback policy of the European Central Bank, which, in support of private actors, has already invested 600 billion euros out of its 1350 billion envelope of the emergency program to cope to the pandemic.

Source: lefigaro

All news articles on 2020-10-20

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