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The EU recovery fund may transform European bond markets

The EU’s new recovery fund is a historic step to help the countries worst affected by Covid avoid a debt trap. If the EU’s short-term bills become a risk-free, interest-rate instrument, this temporary response to the deadly virus could become a permanent change to Europe’s capital markets

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In This Story

  • Vast issuance programme
  • EU could soon be borrowing €200 billion a year
  • Where to start?
  • Syndications first, with new issue concessions
  • The case for T-bills
  • Early move could raise a lot of money quickly
  • Becoming a sovereign
  • Pitch is high quality exposure to whole of EU
  • Euros, but maybe dollars too
  • Issuing outside the euro would give flexibility
  • Completing CMU
  • T-bills might transform Europe's capital markets
  • Temporary to permanent?
  • Will emergency response be dismantled?

    Towards the end of September the EU will launch a large new borrowing programme in the international debt capital markets that may see it sell over €30 billion of new bonds in the last three months of 2020.

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