Communication on a new funding strategy to finance NextGenerationEU

Author (Corporate)
Series Details COM (2021) 250
Publication Date 14/04/2021
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Communication published by the European Commission on 14 April 2021, setting out a funding strategy aimed at ensuring the availability of funds required to fulfil the objectives of the EU Recovery Instrument.

Further information:

The European Union Recovery Instrument - also known as the Next Generation EU (NGEU) - is a temporary instrument aimed at supporting economic recovery following the COVID-19 (coronavirus) pandemic. It can raise up to €750 billion (2018 prices) through bond issuance. In this context, the European Commission is to borrow on the capital markets on advantageous conditions due to the EU's high credit rating. The benefit is then passed on to the EU Member States directly when providing them loans or to the EU Budget in the form of low interest rate payments on borrowings to finance recovery spending. The borrowing is to be concentrated between 2021 and 2026.

While the Commission has borrowed on previous occasions, the volumes, frequency and complexity of the NGEU borrowing called for a fundamental change in the approach to capital markets. This Communication therefore calls for an overhaul of how the Commission raises funds through bond issuance. It is adopted in accordance with Council Decision 2020/2053. Alongside this Communication, the Commission also adopted a Decision on the governance arrangement and risk management systems for NGEU and a Commission Decision on the Primary Dealer Network.

On 1 June 2021, the Commission announced its estimates to issue around €80 billion of long-term bonds in 2021, in line with this strategy.

Source Link
Related Links
Reuters, 01/06/2021: EU Commission to borrow 80 billion euros in 2021 to finance recovery

European Commission: The EU as a borrower – investor relations
European Commission: Press Release, 14/04/2021: NextGenerationEU: Commission gets ready to raise up to €800 billion to fund the recovery
European Commission: Funding strategy for NextGenerationEU: Questions and Answers (14 April 2021)
European Commission: Presentation by Commissioner Hahn of the NextGenerationEU – Funding strategy to finance the Recovery Plan for Europe (14 April 2021)
European Commission: Press Release, 01/06/2021: NextGenerationEU: European Commission to issue around €80 billion in long-term bonds as part of funding plan for 2021
European Commission: NextGenerationEU: Questions and Answers on the Commission's first funding plan (1 June 2021)

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