The European Commission has announced its funding strategy to finance NextGenerationEU – a temporary instrument designed to boost recovery from the coronavirus pandemic and build a greener, more digital and more resilient future.
The instrument will be financed on the most advantageous terms for EU Member States and their citizens.
The Commission will use a diversified funding strategy to raise up to around €800 billion in current prices until 2026. This approach, which will be in line with the best practices of sovereign issuers, will enable the Commission to raise the needed volumes in a smooth and efficient way. This will also attract investors to Europe and strengthen the international role of the euro.
NextGenerationEU will be funded by borrowing on the capital markets at an average of around €150 billion per year, which will make the EU one of the largest issuers in euro. All borrowing will be repaid by 2058.
A diversified funding strategy will enable the Commission to mobilise all funds when required on the most advantageous terms for the EU Member States and their citizens by using different funding instruments and funding techniques with an open and transparent communication to the market participants.
The Commission’s diversified funding strategy would combine:
- Annual decision on borrowing volumes and six-monthly communication on the funding plan’s key parameters, to offer transparency and predictability to investors and other stakeholders;
- Structured and transparent relationships with banks supporting the issuance programme (via a Primary Dealer Network);
- Multiple funding instruments (medium and long-term bonds, some of which will be issued as NextGenerationEU green bonds, and EU-Bills) to maintain flexibility in terms of market access and to manage liquidity needs and the maturity profile;
- A combination of auctions and syndications, to ensure cost efficient access to the necessary funding on advantageous terms.
The borrowing operations will be embedded in a robust governance framework, which will ensure coherent and consistent execution. In its work, the Commission will continue to coordinate with other issuers, including the EU Member States and« Back