To finance its past lending programmes, the Commission has issued bonds with maturities of 3 to 30 years.
To be able to place the full size of NextGenerationEU under optimal conditions, the Commission is using bonds with varying maturities as well as short-term term debt instruments, EU-Bills.
EU-Bonds
Issuing bonds through benchmark maturities (3, 5, 7, 10, 15, 20, 25, 30 years) is the principal way for an issuer to implement its funding plan.
In the past, the Commission has issued benchmark bonds with different maturities - from 5 to 30 years – to finance SURE.
The NextGenerationEU issuance programme gives the Commission the opportunity to consolidate a regular presence on all parts of the curve with as liquid as possible EU-Bonds.
Rather than issuing new bonds with new maturities, the Commission will where possible augment the amount of already issued bonds (taps). By doing so the outstanding amount of the bond will make these bonds more liquid in the secondary market trading and hence more attractive to investors.
EU-Bills
The Commission is starting in September 2021 to issue securities with a shorter maturity – below one year, EU-Bills.
The EU-Bill programme will enable the Commission to establish a regular and stable presence in the very deep and liquid money market. It will also make it possible for the Commission to widen its investor base by attracting new investors or different portfolios of existing investors.
To issue EU-Bills, the Commission will always rely on auctions, in line with standard market practice.
Private placements
A private placement of EU bonds involves its placement with pre-selected investors and institutions rather than through public offer. This technique is typically used for placement of small amounts (up to €300 million) with one or more institutional investors.
In the past, the Commission has mainly used private placements for transactions under its MFA programme.
The Commission will continue using private placements as a transaction format where relevant.