Common Eurozone Debt Issuance a Step Closer
(12 October 2020 – Europe) The European Union (EU) is advancing plans to issue common debt as it seeks to tap the bond market for the first time on a large scale to fund COVID-19 relief programs.
The European Commission executive arm confirmed a new program labelled the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) will raise €100 billion from the sale of social bonds. Social bonds are a type of sustainable debt instrument that funds projects with the aim of having a positive societal impact. The capital raised will be lent to member states to help pay for unemployment support programs and protect jobs.
“Issuance will be large but easily absorbed by the investor community. For us it’s certainly interesting. This is also perceived as a big step forward for the EU and the cohesion of the area. This is still expected to turn the EU into one of the largest bond issuers in the eurozone“ stated PIMCO Portfolio Manager Konstantin Veit.