By 2026 EU Bonds are expected to reach €1 trillion, constituting almost 40% of the outstanding AAA rated government debt. These outstanding amounts will exceed the combined amounts of all main Supranational, Sub-sovereign and Agency (SSA) issuers (EIB, ESM, KfW) in euro. As a result EU Bonds will represent a 60-70% weight in the SSA indices, giving them an excessively dominant weight in these indices. At the same time the EU’s institutional structure is different from the institutional structure of a typical SSA, including a budget-based financial structure. 

In view of these changes a number of index providers have started to consult their stakeholders on the possible reclassification of the EU in their sovereign indices. In the first consultation to conclude, one index provider, MSCI, announced on 12 June its decision to not include at this point EU Bonds in the MSCI government bond indices due to a ‘bifurcation’ of views in the market on this issue. MSCI has announced that it will revisit this issue in its market consultation in Q2 2025. 

The divided views among MSCI stakeholders on this matter show the importance of an active dialogue on the best future classification of EU’s large-scale issuance across indices. 

Investors are encouraged to express their views on this topic through currently open* and future consultations undertaken by index providers.

Further details on the characteristics of EU as an issuer can be found the EU Investor Presentation here.

* Currently open consultations: ICE consultation open until 30th June 2024