EU issues the largest single tranche bond to fund post-Covid recovery

The European Union sends a strong message with its inaugural NextGenerationEU bond to support a green, digital and responsible recovery.

With a final size of €20 billion, the inaugural NextGenerationEU (NGEU) 10-year bond was 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.

Today is a truly historic day for our European Union. We successfully conducted the first funding operation for NextGenerationEU. […] 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.

Ursula von der Leyen, European Commission President

BNP Paribas has been appointed as joint-lead manager and duration manager on this historical issuance. BNP Paribas Securities Services is acting as issuing and paying agent for the entire EU Debt Issuance programme, which includes all issuances under the NGEU plan.

BNP Paribas is the only bank mandated for both this inaugural NGEU transaction and the inaugural EU SURE, for the €17 billion dual tranche, which attracted over €230 billion investor demand in October 2020. BNP Paribas Securities Services was also the issuing and paying agent for the SURE bonds.

The EU mandates reflect BNP Paribas’ strong credentials in primary markets and sustainability objectives as well as the Bank’s rigorous conduct track record, to support a responsible post-pandemic recovery in Europe.

The NGEU inaugural bond is the largest ever single tranche syndicated transaction in capital markets history. The NGEU offering met with overwhelming investor support, with more than €142 billion in demand from over 600 orders. The bond priced at two basis points below mid-swaps (MS).

Jamie Stirling, Global Head SSA DCM, Global Markets, BNP Paribas

ALM Treasury invested within the Group Liquidity Buffer mandate and this deal fits perfectly with our long-term commitments to support the real economy.

Ingrid Penko, Bond Portfolio Management Front Officer, BNP Paribas ALM Treasury

NextGenerationEU (NGEU) is a temporary recovery instrument set up by the European Union to boost its post-pandemic recovery, and will be part of the largest stimulus package ever financed in Europe. It follows the SURE social bonds which the EU issued to support its member states’ employment programmes.

NextGenerationEU is at the heart of the EU common response to support Europe’s recovery from the coronavirus pandemic. For the first time, our Union will finance jointly a sustainable and resilient recovery, and pave the way for a green and digital future.  We are proud to be part of this important step in the EU’s history.

Jean Lemierre, Chairman of the Board of Directors, BNP Paribas

NGEU can raise up to €750 billion in 2018 prices or some €800 billion in current prices through bonds, which the European Commission will issue on behalf of the EU.

We are honoured to have been mandated for the two inaugurals issuances of the EU flagship programs SURE and NGEU. We thank the European Commission teams for their trust, which is the testimony of the strong partnership we have built between our institutions over time.

Alain Papiasse, Chairman of CIB, BNP Paribas

The borrowing programme will be concentrated between mid-2021 and 2026, and all borrowing will be repaid by 2058.

As issuing and paying agent, BNP Paribas Securities Services strongly collaborated with the European Commission over the past few weeks in updating the EU Debt issuance programme documentation to account for NGEU funding strategy.

This included working on the inclusion of new debt instruments that the European Union intends to use in a later stage such as auction based issuances.

Laurent Libiszewski, Global Head of Debt Products & Solutions, BNP Paribas Securities Services

Our integrated bank model has been a differentiating factor to strengthen our partnership with the European Union. Building on our global platform and unique resources, from DCM to Securities Services, and Financial Institutions Coverage to ALM Treasury, our teams have worked together to design the solutions fully tailored to the EU needs.

Zineddine Alla, Senior Banker, Official Institutions Coverage (Financial Institutions Coverage), BNP Paribas
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