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Large-scale EU issuance: 3 years on

Author

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  • Daniel P. Monteiro

Abstract

Large scale issuance by the EU began a little over three years ago, in October 2020. Since then, the outstanding amounts issued by the EU have risen continuously in connection with the SURE and NGEU programmes, from approximately € 50 bn to potentially more than € 900 bn by 2026. This chapter takes stock of the first three years of large-scale EU issuance in terms of its market performance and the savings that NGEU loans can provide to beneficiary Member States. In particular, we investigate the changing contributions of different drivers of market performance over time along the yield, spread and liquidity dimensions. Three phases are identified in this regard, from an encouraging performance up until early 2022, through a modest deterioration in 2022, to a degree of recovery in 2023. We also compute illustrative country-specific measures of the financial benefit from taking up an NGEU loan, as opposed to borrowing directly from the market, and conclude that, from the strict perspective of funding cost differentials, NGEU loans can offer sizeable returns to the Member States that have requested them

Suggested Citation

  • Daniel P. Monteiro, 2024. "Large-scale EU issuance: 3 years on," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 22(4), pages 37-47, February.
    • Handle: RePEc:euf:qreuro:0224-03
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