The European Commission launched its EU SURE bonds program with a €17 billion issue of the new social bonds, with proceeds aimed to help protect jobs and keep people in work. The EU SURE offering consisted of two bonds, with €10 billion due for repayment in October 2030 and €7 billion due for repayment in 2040. According to the European Commission, investor demand for the bonds was very strong, with the offering more than 13x oversubscribed.
The offering marked the Commission’s largest ever bond issuance, and represents a major development in the market for sustainable finance.
President of the European Commission Ursula von der Leyen said:
“For the first time in history, the Commission is issuing social bonds on the market, to raise money that will help keep people in jobs. This unprecedented step matches the extraordinary times we are living in. We are sparing no efforts to safeguard livelihoods in Europe. I’m glad that countries hit badly by the crisis will receive support under SURE rapidly.”
The offering comes shortly after the European Commission announcement earlier this month that it intends to issue up to €100 billion of social bonds under the recently approved temporary Support to mitigate Unemployment Risks in an Emergency (SURE) program. Funds from SURE will be made available for Member States that need to mobilise significant financial means to fight the negative economic and social consequences of the coronavirus outbreak on their territory. To date, the Commission has proposed a total of €87.8 billion in financial support under SURE to 17 Member States.
The European Commission also recently adopted a new Social Bond Framework, outlining eligible uses of funds from the issue, specifying that the proceeds will help to finance measures by EU Member States to alleviate negative impacts on employment income as a result of the Covid-19 pandemic. The framework also highlights that the social expenditures made under the program aim to contribute to UN Sustainable Development Goals (SDGs) number 3 (Good Health and Well Being), and 8 (Decent Work and Economic Growth).
European Commissioner Johannes Hahn in charge of Budget and Administration said:
“With this operation, the European Commission has made a first step towards entering the major league in global debt capital markets. The strong investor interest and the favourable conditions under which the bond was placed are further proof of the great interest in EU bonds. The “social bond” character of the issuance has helped to attract investors who wish to help EU Member States in supporting employment through these difficult times.”
Joint bookrunners on the deal were Barclays, BNP Paribas, Deutsche Bank, Nomura and UniCredit.