De nye EU-obligationer fra den gigantiske EU-fond er kommet på markedet, og der var straks en kraftig efterspørgsel. Der kommer flere udbud i årets løb. Renten er særdeles lav, på under 0,1 pct., og det forklarer efterspørgselen, mener ABN Amro. På grund af statsgarantien bag fonden venter banken, at EU-obligationerne bliver mere efterspurgte end statsobligationer. ECB ventes at købe en betydelig del af de nye obligationer, som kaldes NGEU.
Strong demand for EU bonds
Euro Rates: Debut 10y NGEU bond met by smashing demand –
The European Commission issued its debut NextGenerationEU bond on behalf of the EU. By doing so, it kicked off financing under the EUR 750bn Recovery Fund. The debut 10y NGEU bond attracted significant demand, with final books over EUR 140bn.
The EC took advantage of this and set the deal size at EUR 20bn. Consequently, the EC issued already a quarter of its targeted long-term funding under NGEU for 2021, which is set at EUR 80bn. Two more syndicated deals are expected to follow before August. In addition, long-term funding will be complemented by some tens of billions of EU-bills, which will be issued from September onwards.
The NGEU bonds were issued 2bp below mid swap, corresponding to an outright yield of 0.086% and a yield spread over Germany of around 32bp at the time of pricing. Based on an interpolation exercise including EU bonds issued under the SURE program, we judge that the NGEU bonds were issued with a new issue premium of around 4bp. Indeed, this could partly explain the high demand for the inaugural issuance, but there are additional reasons for our bullish view on EU bonds.
We see room for outperformance of NGEU bonds –
The risk that the market attributes to an EU bond seems to be similar to the risk attributed to semi-core government bonds with a lower credit rating. However, amongst others due to the sum of guarantees provided for by highly-rated member states (Germany and the Netherlands together already provide sufficient guarantees to absorb a potential future loan default), we see room for EU bonds to outperform versus (semi) core government bonds.
In addition, we expect demand for NGEU bonds to remain strong as we expect amongst others the attractiveness of EU bonds to improve as liquidity increases. Indeed, the EU issuance spree, which is expected to amount to an average of around EUR 150bn per year between 2021 and 2026, will add significantly to the liquidity in EU bonds. On top of that, we expect investors search for safe assets to flock to these deals and foresee that also the ECB will buy a significant chunk of the flood of net supply coming from the EU.
