The EU is rated AAA/Aaa/AAA/AAA (outlook stable) by Fitch, Moody’s, DBRS and Scope and AA (outlook positive) by Standard & Poor’s.
The EU’s ratings are a reflection of the fact that:
- EU borrowings are direct and unconditional obligations of the EU. The EU is legally bound by the Treaty on the Functioning of the EU (Article 323) to service the EU debt.
- The EU’s debt service is ensured based on multiple layers of debt-service protection. In principle, the EU pays its own debt with the loan redemption payments received from the loan beneficiaries (back-to-back lending). EU loan beneficiaries have always serviced their debt.
- In the unlikely event of non-payment of a loan beneficiary, the EU budget guarantees that the EU timely honours its obligations.
- For the SURE programme, Member States provided additional guarantees of €25 billion.
- EU borrowing has traditionally been used to finance loans to countries – both EU Member States and third countries eligible for MFA assistance. Subject to the European Council agreement on the Recovery Plan (July 2020), the Commission will be exceptionally empowered to borrow to fund crisis-repair and recovery actions through the NextGenerationEU instrument.
- To back the borrowing under NextGenerationEU, the EU will use the budgetary headroom. The headroom is the difference between the Own Resources ceiling of the long-term budget and the actual spending. The headroom will serve as a guarantee that the EU will be able to make repayments under any circumstances.
- To guarantee sufficient headroom, EU Member States need to approve the Own Resources Decision in line with their constitutional requirements.
|Standard & Poor's||AA /
|Fitch ratings||AAA /
More details on the EU's credit ratings can be found in the EU Investor Presentation.