The European Commission has issued €7.05 billion in its last syndicated transaction of 2022.
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The deal consisted of a new 15-year social bond of €6.548 billion for the EU's SURE programme due in December 2037 and a €500 million tap of an existing bond due in 2052 for the EU's emergency Macro-financial assistance (MFA) programme for Ukraine.
Both bonds were very well-supported, allowing the EU to place the bonds on good terms for such a large transaction in this end-of-year window.
With this, the Commission closes both its SURE programme and the emergency MFA programme for Ukraine.
The proceeds from the social bond will be used for the implementation of the SURE programme in Bulgaria, Cyprus, Czechia, Greece, Croatia, Lithuania, Latvia, Poland and Portugal, all of which have already benefited from funds under the scheme.
With this, €98.4 billion of the full envelope of €100 billion under the programme – which enables EU countries to provide employment and income support to businesses and citizens affected by the pandemic – has been disbursed.
The €500 million for Ukraine is the last tranche of the extraordinary MFA programme the Commission is providing to Ukraine for 2022 following the start of Russia's war of aggression against the country.
Following this latest transaction, the Commission will have provided a total of €7.2 billion in MFA support to Ukraine in 2022. A package of €18 billion in additional loan support for Ukraine has been proposed by the Commission for 2023 which will be financed through bond issuance once approved.
The European Commission is borrowing on international capital markets on behalf of the European Union and disbursing the funds to Member States and third countries under various borrowing programmes.
Its largest programme is NextGenerationEU, of up to around €800 billion, which seeks to support Europe's recovery from the coronavirus pandemic through investments in sustainability, digital solutions and resilience.
The 15-year bond carries a coupon of 2.750% and came at a re-offer yield of 2.767% providing a spread of +21 bp to mid-swaps, which is equivalent to + 86.8 bps over the 15-year Bund due in May 2036 and to +24.0 bps over the 15-year OAT due in May 2036.
The final order book was over €25 billion.
The 30-year tap carries a coupon of 2.500% and came at a re-offer yield of 2.554% providing a spread of +66 bps to mid-swaps, which is equivalent to + 97.5 bps over the 30-year Bund due in 15 August 2052 and to 15.1 bps to the 30-year OAT due in 25 May 2052.