EU Commission Raises 27 Trillion Won Through First Economic Recovery Support Bond Transaction

[Image source=Yonhap News]

[Asia Economy Reporter Donghoon Jeong] The European Commission, the executive branch of the European Union (EU), announced on the 15th (local time) that it raised 20 billion euros (approximately 27 trillion KRW) through 10-year bonds as a funding plan for COVID-19 economic recovery.

The EU Commission explained that this is the largest issuance of institutional bonds within Europe, the largest single institutional transaction, and the largest amount raised by the EU in a single transaction. Ursula von der Leyen, President of the EU Commission, stated, "Today is truly a historic day for the EU," and announced the successful completion of the first fundraising operation.

Previously, the 27 EU member states agreed to establish a 750 billion euro (approximately 1,016.8275 trillion KRW) economic recovery fund. This fund allows the EU Commission to borrow money from financial markets using its high credit rating to support member states severely affected by COVID-19, such as Italy and Spain.

It is unprecedented for the EU to issue such a large-scale joint bond. Although there have been past instances of joint borrowing in financial markets, including during the Eurozone debt crisis in 2010, those were on a smaller scale.

The funds raised by the EU Commission in this way will be provided to member states as grants and loans. The EU Commission has announced plans to issue long-term bonds worth 80 billion euros (approximately 108.4616 trillion KRW) this year to support this effort.