EU issues €13bn sure social bond to further mitigate pandemic impact

The European Union has successfully issued a dual-tranche social bond to help Member States cushion the severe socio-economic impact from the Covid-19 crisis.

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In an effort to extend its positive impact in the face of the continued social and economic crisis due to the Covid-19 pandemic, the European Union (EU) successfully issued a €13bn dual-tranche social bond on 23 March.

This is the sixth social bond issue and the second BNP Paribas has led under the EU’s €100bn Support to mitigate Unemployment Risks in an Emergency (SURE) programme. BNP Paribas Securities Services is the Issuing & Paying Agent for the EU Debt Issuance Programme, of which SURE is part.

The EU’s SURE social bond issuance programme has so far supported up to 30 million people and 2.5 million firms, according to a recent report from the European Commission. “SURE is a crucial element of the EU’s comprehensive strategy to protect citizens and mitigate the severely negative socio-economic consequences of the Covid-19 pandemic,” the report found.

EU Commissioner Johannes Hahn, in charge of Budget and Administration, said in the EU press release: “This second SURE transaction for this month and the sixth one since the start of the programme has once again been welcome with a strong interest by the market. We have once again obtained favourable good pricing to the benefit of benefitting EU countries and their citizens. This is a good illustration of EU added value at times of pandemic and yet another encouraging message in the run-up to the NextGenerationEU borrowing later this year”.

Jean Lemierre, Chairman of the Board of Directors at BNP Paribas, said: “The European Union designed the SURE programme to respond to the ongoing economic and social crisis from the Covid-19 pandemic. This latest debt issuance, the sixth in the SURE instrument and the second BNP Paribas is supporting the EU with as Joint Lead Manager, will help Member States contain unemployment and fund rising healthcare costs.”

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Source: BNP Paribas

The European Commission’s first preliminary assessment report, SURE: Taking Stock After Six Months published on 22 March, found that “SURE has been successful in cushioning the severe socio-economic impact resulting from the Covid-19 crisis. It has helped to ensure that the increase in unemployment in the beneficiary Member States during the crisis has been significantly smaller than during the global financial crisis, despite them experiencing a larger decrease in GDP.”

The SURE bonds’ proceeds will be used specifically to contribute to two of The United Nations’ Sustainable Development Goals (UN SDGs):

  • SDG8 – Target employment generation and programmes designed to prevent and/or alleviate unemployment
  • SDG3 – Good health and wellbeing through increasing access to universal health coverage, including financial risk protection, and affordable essential medicines.

Alain Papiasse, Chairman of CIB, BNP Paribas, said: “The latest debt issuance within the EU SURE programme will assist Member States to cope with continued increases in public expenditure to preserve employment. We are honoured by the trust the EU places in BNP Paribas as a lead in two of the six issuances and as the Issuing and Paying Agent for the EU Debt Issuance Programme.”

The latest issuance brings the total SURE programme size to date to €75.5bn, with additional issues expected in the second quarter of the year, before the EU launches its NextGenerationEU programme expected for July 2021.

Delphine Queniart, Global Head of Sustainable Finance & Solutions at BNP Paribas Global Markets, said: “I’m very proud that BNP Paribas has now lead-managed a total of €30bn of the EU’s €75.5bn SURE financing to date. Sustainable finance can and must play a crucial role in a post-Covid responsible recovery.”

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Source: European Commission