The European Commission, on behalf of the EU, is a well-established participant in the capital markets. Over a period of 40 years, the European Commission has run several lending programmes to support EU Member States and third countries.
The current financial assistance programs are:
- The Balance of Payments (BOP) assistance facility, which enables the EU to provide assistance to EU countries outside the euro area experiencing or threatened by difficulties regarding their balance of payments;
- The European Financial Stabilisation Mechanism (EFSM), which enables the EU to provide financial assistance to any EU Member State experiencing or threatened by severe financial difficulties;
- Support to mitigate Unemployment Risks in an Emergency (SURE), an up to €100 billion euro instrument to finance short-term employment schemes across the EU Member States in the fallout of the coronavirus pandemic;
- Macro-Financial Assistance (MFA), which can be provided in the form of loans and grants to partner countries outside the EU experiencing a balance of payments crisis. In 2020, an exceptional MFA package was adopted to help ten partner countries to limit the economic fallout of the coronavirus pandemic.
The funding activities for these programmes are organised on a back-to-back basis. This means that funds raised on the market are on-lent by the Commission to beneficiary countries on the same terms and conditions (coupon, maturity, nominal amount) as those received by the Commission. This transfers the benefit of the Commission’s comparatively attractive financing rates to the beneficiary country.
Under the first three instruments, the Commission typically issues benchmark size transactions. For smaller MFA disbursements, funding needs are sometimes met through private placements of a few hundred million euro.
Bond issuances for these four EU programs are exclusively denominated in euro. The maturities of issued bonds range from 3 to 30 years. Transactions have so far been predominantly organised as syndicated bond issues, with some private placements for MFA. All bonds have been issued under the EU/Euratom Debt Issuance Programme and are listed at the Luxemburg Stock Exchange. The Offering Circular and further related information can be found at the Exchange's website.