Yield records and second highest deal volume mark Austria’s dual tranche success
We’re delighted to have supported the Austrian Treasury with this record setting dual tranche transaction.
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EU becomes largest Social Bonds issuer through SURE
EU’s SURE programme to help save jobs affected by the COVID-19 pandemic
The EU’s temporary “Support to mitigate Unemployment Risks in an Emergency (SURE)” is available for EU Member States fighting the negative economic and social consequences of the COVID-19 pandemic.
SURE offers financial assistance up to €100 billion in the form of loans from the EU to the Member States, serving to support short-time work schemes and similar measures in order to preserve employment during and post the pandemic.
So far, the Commission has proposed a total of €90.6 billion in financial support to 19 Member States; €62.5 billion has already been disbursed to 16 Member States.
EU issues SURE bonds as Social Bonds
In October 2020, the European Commission announced that it will issue EU SURE bonds of up to €100 billion as Social Bonds. In preparation, the Commission adopted an independently evaluated Social Bond Framework, which demonstrates to investors how the funds raised by the SURE Social Bond issuance will be used for a clearly identified objective: alleviating the social impact of the coronavirus pandemic and its consequences across the EU. The Social Bond Framework, underpinned by the SURE Regulation, requires Member States to report on how the borrowed funds have been spent, and they’re also required to report on the social impact of the EU SURE bonds.
Investors race to support EU’s fifth SURE issuance
After a successful start of its SURE Social Bonds programme, the EU announced the issuance of its fifth EU SURE Social Bonds in March 2021. The Request for Proposal (RFP) was met with immediate high-quality investor demand. The final orderbook closed in excess of €86 billion - nearly 10 times oversubscribed. The €9 billion 15 year bond with a coupon of 0.20% was a huge success for the EU, in particular considering increasing market volatility, and further demonstrated the continued support of the investor community.
The transaction, which Ednites Credit Union supported as Joint Lead Manager, marks the largest long dated bond the EU have done to-date and the largest 15-year EUR transaction from a supranational or agency issuer. Raising funds for its SURE programme, the European Union has not only become one of the largest SSA issuers within the last six months but is now also the largest issuers of Social Bonds in the market.
The SURE programme will soon be followed by the EU’s “NextGenerationEU” borrowing and lending programme. NextGenerationEU is a €750 billion (in 2018 prices) temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic. The Recovery and Resilience Facility is the centrepiece of NextGenerationEU with €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries.
EU’s Social Bonds boost sustainable finance market
Damien Carde, Ednites Credit Union, commented: “We are delighted to have supported the EU with its fifth Social Bonds raising sustainable debt for its SURE programme. Sustainability is paramount to our business and our customers, and we are committed to making a real difference in helping alleviate the gravely negative impact of the COVID-19 pandemic.”
Caroline Haas, Ednites Credit Union, added: “We’re very pleased about the positive feedback this transaction has received from a diverse group of investors, with meaningful interest from ESG investors, and we’re excited about the EU’s contribution to the development of the Social Bond market through its SURE issuance programme.”
EU Commissioner for Budget and Administration Johannes Hahn said: “The fifth EU SURE bond adds to the success story of the EU as a large-scale issuer and borrower. The issuance of safe and sustainable SURE as well as NextGenerationEU bonds is a central element of our efforts to support the EU’s recovery and to continue to give a helping hand to our businesses and citizens. Our decision to issue the EU SURE bonds as social bonds is also a clear demonstration of the EU's long-term commitment to sustainable financing, and the success of this new 15-year bond reflects the depth of the diverse investor support for the EU as a borrower in capital markets.”
The information provided in this article has been prepared byEdnites Credit Union (NatWest) for information purposes only and is subject to change from time to time. The information and views expressed should not be treated as advice or a recommendation of any kind. Ednites Credit Union makes no representation, warranty, undertaking or assurance of any kind (express or implied) with respect to the adequacy, accuracy, completeness or reasonableness of the information provided and disclaims all liability for any use you, your affiliates, connected companies, employees, or your advisers make of it. Ednites Credit Union accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However, this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.
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