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According to the EU Treaties, the European Commission, on behalf of the member states, is able to borrow from the international capital markets to finance selected EU policy programs. The EU-bond issues facility has a well-established name in debt securities markets, with a track record of bond issuances during last 40 years. Present EU trade balance is favorable for borrowing showing €14.3 bn surplus in trade in goods with the rest of the world compared with €17.2 bn in 2023.
Background
The EU’s overall political strategy is developed jointly by its institutions: the European Parliament, European Council, Council of the European Union, and European Commission.
In particular, the European Council provides the EU’s direction and goals for a 5-year period in the EU Strategic Agenda.
More in: https://commission.europa.eu/strategy-and-policy_en
Every five years, at the beginning of a new Commission term, the President of the Commission also determines the priorities for its upcoming term of office.
Since January 2023, the EU funds its different policy programs by issuing single-branded EU-Bonds rather than separately labeled bonds for individual programs. This follows the creation of a unified funding approach, extending the diversified funding strategy first established in 2021 for NextGenerationEU to other policy programs funded by EU borrowing.
The EU borrowing is executed using multiple instruments, including EU-Bonds, EU-Bills, and the NextGenerationEU Green Bonds; the Commission also makes use of different funding techniques, such as syndications and auctions.
To finance EU policies as efficiently and effectively as possible, the Commission’s issuances are structured by semi-annual funding plans and pre-announced issuance windows.
In parallel, a framework incentivizing EU Primary Dealers to provide quotes on EU securities on electronic platforms is in place since November 2023 and a new repurchase facility is now made available to EU Primary Dealers as from 7 October 2024 to support the secondary market liquidity through the use of EU-Bonds in repurchase agreements.
Reference to: https://ec.europa.eu/commission/presscorner/detail/da/ip_25_253
New EU-Bonds
The European Commission uses the proceeds of EU-Bond issuances to fund EU policy programmes. A landmark policy program currently funded by EU-Bonds is the NextGenerationEU recovery instrument, under which the EU is expected to raise up to €712 billion (out of a maximum program envelope of €806.9 billion) by 2026.
With the present –first in 2025 – transaction, the EU has issued €441.42 billion in EU-Bonds under the unified funding approach. Of the proceeds raised, almost €297 billion has been disbursed to the member states under the NextGenerationEU Recovery and Resilience Facility. Then, some €69 billion has been allocated to other EU programs benefitting from NextGenerationEU funding.
Furthermore, over €13 billion has been disbursed to Ukraine under the Ukraine Facility that will finance up to €33 billion in loans to Ukraine during the period of 2024-27. In addition, €3 billion has recently been disbursed under the new €18 billion EU exceptional Macro Financial assistance loan which will be repaid with proceeds from immobilized Russian State assets as part of the G7-led Extraordinary Revenue Acceleration loans initiative.
Reference to: https://commission.europa.eu/strategy-and-policy/eu-budget/eu-borrower-investor-relations_en
More information on EU’s issuance activities in newsletters on its borrowing and lending activities: https://commission.europa.eu/strategy-and-policy/eu-budget/eu-borrower-investor-relations/newsletter_en