FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium May 5, 2021. REUTERS/Yves Herman/File Photo
(Reuters) -The European Union raised 20 billion euros ($24.25 billion) with the first bond backing its pandemic recovery fund and drew near-record demand, two lead managers said, as investors snapped up debt that is expected to offer both safety and liquidity as the EU becomes a leading debt issuer.
The 10-year bond is the first of up to 800 billion euros of issuance by the EU to finance the fund, which marks an unprecedented act of European fiscal solidarity. Issuance until end-2026 will back grants and loans to member states to help their economies recover from the COVID-19 crisis.
The deal is one of the biggest single-tranche debt sales on record, according to Refinitiv, well above earlier indications of around 10 billion euros.
The EU had already issued 90 billion euros of debt since last October to back its employment support programme SURE.
But the scale of the new programme, which the 27-country EU is managing similarly to a government issuer, has the potential to transform it into the world’s biggest supranational borrower, selling debt at a pace similar to Germany and Spain, according to JP Morgan.
Tuesday’s deal shows continued interest from investors keen to buy scarce triple-A rated debt whilst gaining a yield pick-up over Europe’s benchmark issuer Germany.