The European Union (EU) is concluding its bond issuance program for the year with a successful syndicated sale, raising up to €7 billion ($7.4 billion) through the sale of conventional and green bonds, Bloomberg reports.
The sale, offered to investors via a group of underwriters rather than a public auction, attracted significantly more demand than supply.
The offering consisted of two tranches: a seven-year security and a 20-year green bond. According to sources familiar with the matter, who requested anonymity, the seven-year bond was priced at approximately 47 basis points over comparable swaps, while the green 20-year bond offered a spread of 95 basis points.
While syndicated sales typically carry higher costs than auctions, they provide a faster way for governments to raise substantial funds and broaden their investor base. The EU’s sale already secured €125 billion in orders, over 17 times the amount offered, although this is slightly less than the €166 billion received in a similar syndication last month.
The strong demand reflects the continued appeal of EU debt, further bolstered by Intercontinental Exchange Inc.’s (ICE) recent announcement of a new futures contract for EU bonds, launching next month. The EU has long advocated for a robust futures market to enhance liquidity in its debt securities. However, Eurex Clearing AG recently postponed its plans for a similar contract this year, citing concerns about the long-term sustainability of the EU’s bond program beyond 2026.
The strong performance of this final syndication, coupled with a planned regular bond sale next week, suggests the EU may forgo an optional December syndication. Bank of America Corp., Credit Agricole CIB, Deutsche Bank AG, HSBC Holdings Plc, and Nomura Holdings Inc. acted as bookrunners for the transaction.
