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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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. That is more than the EU has ever issued in any single year before.
Next year, it will borrow more than twice that amount just to complete the €100 billion funding of the catchily titled Support to mitigate Unemployment Risks in an Emergency (Sure) programme, first proposed by the European Commission in April and approved by the European Council in May.