Brussels: Europe and the Arabs

The European Commission in Brussels issued €9 billion in EU bonds, its third joint financing operation for 2026. This single-tranche operation involved the issuance of new bonds worth €9 billion maturing on December 12, 2036. The 10-year bonds were priced at 99.342% with a re-offer yield of 3.325%. Orders exceeded €118 billion, representing an oversubscription of approximately 13 times.

According to a European statement released Tuesday evening, this operation marks the first time the EU has used the EU yield curve as a benchmark for pricing the new issue. This approach has helped mitigate pricing risks for participating investors in a volatile market and reflects a natural evolution in the EU's financing approach, as the EU yield curve is now sufficiently liquid to enable this type of pricing when needed. The proceeds from this operation will be used to finance EU policy programs, particularly within the framework of the EU Next Generation Initiative and support for Ukraine.

New 10-Year Bond

This bond matures on December 12, 2036, and carries an annual coupon of 3.250% and a re-offer yield of 3.325%, equivalent to a yield of 99.342%. The yield is 13 basis points compared to EU bonds maturing on December 12, 2035, which equates to an average yield of 39.3 basis points; 46.3 basis points compared to German bonds maturing on February 15, 2036; and 21.9 basis points compared to US Treasury bonds maturing on May 25, 2036.

Final orders exceeded €118 billion.

The lead banks involved in managing this issuance were Barclays, DZ, Morgan Stanley, Société Générale, and UBS.

The European Commission has so far issued €45.4 billion of its €90 billion target for financing the first half of 2026. A comprehensive overview of all EU transactions executed to date is available online. A detailed overview of planned EU transactions for the first half of 2026 is also available in the EU Financing Plan. The next transaction in the EU indicative issuance schedule is the EU bond auction scheduled for 18 March 2026.
The EU Treaties authorize the European Commission to borrow from international capital markets on behalf of the EU to finance selected policy programs. The European Commission is a well-established player in the debt markets, with a proven track record of bond issuance over the past 40 years. All European Commission issuances are denominated exclusively in euros. The EU budget guarantees all EU borrowing, and contributions to the EU budget are an unconditional legal obligation for all Member States under the EU Treaties.

Since January 2023, the EU has financed its various policy programs by issuing single bonds bearing the EU brand, rather than issuing separate bonds for each program. This follows the introduction of a single financing approach, extending the diversified financing strategy first introduced in 2021 for the NextGenerationEU program to other policy programs financed by EU borrowing.

To finance EU policies as efficiently and effectively as possible, Commission issuances are structured according to semi-annual financing plans and pre-announced issuance periods. In parallel, since November 2023, a framework has been in place to incentivize primary dealers in the EU to bid on EU securities on electronic platforms, and since October 2024, a repurchase mechanism has been available to them to support secondary market liquidity through the use of EU bonds in repurchase agreements. With this transaction, the total outstanding value of EU bonds under the Single Financing Approach reaches €611.07 billion. Of the proceeds raised, over €379 billion has been disbursed to Member States under the EU Next Generation Recovery and Resilience Facility. An additional €76.5 billion has been allocated to other EU programs benefiting from EU Next Generation Facility financing. Furthermore, the proceeds are being used to finance Ukraine and other EU neighboring countries. The latest support for Ukraine includes the disbursement of €18 billion under the EU Extraordinary Macro-Financial Assistance loan, which will be repaid from the proceeds of frozen Russian government assets as part of the G7-led Extraordinary Revenue Acceleration Loan (ERA) initiative, as well as approximately €23.2 billion within the €33 billion portion of the Ukraine Facility loan (available between 2024 and 2027).* The EU’s total outstanding debt currently stands at around €784.06 billion, of which €36.55 billion is in the form of Eurobonds.