布鲁盖尔研究所-下一代欧盟借款：第一次评估（英）-2021.11-23页_320kb

Summary of Next Generation EU Borrowing: A First Assessment

Core Content

The Next Generation EU (NGEU) programme represents a major shift in the European Union's approach to public borrowing, aiming to establish the EU as a significant player in financial markets. It introduces a new, diversified borrowing strategy to ensure that the EU can raise funds in a cost-effective and reliable manner while maintaining a strong credit rating.

Main Features of the NGEU Borrowing Strategy

• Increased Borrowing Capacity: The EU has significantly expanded its borrowing power, allowing it to issue up to €750 billion (in 2018 prices) from mid-2021 to 2026, which equates to around €150 billion annually.
• Diverse Debt Securities: The EU plans to issue a range of debt instruments, including bonds with maturities from 3 months to 30 years, to build a full benchmark yield curve.
• Primary Dealer Network (PDN): A key component of the strategy is the establishment of a PDN, composed of 41 eligible financial institutions, to support primary and secondary market operations.
• Green Bonds: The EU aims to issue about 30% of its NGEU debt as green bonds, aligning with sustainable finance practices and enhancing the euro's role in the global financial system.
• Market Liquidity and Investor Confidence: The EU's strategy focuses on maintaining liquidity and ensuring that its debt is attractive to investors, which requires a reliable and transparent borrowing process.

Main Objectives and Outcomes

• Market Credibility: The EU must ensure that its debt is well-rated, reliable, and liquid to attract investors and secure low interest rates.
• Funding Mechanisms: The EU will use a combination of auctions and syndicated transactions to issue debt. Auctions are typically cheaper but less predictable, while syndicated transactions offer more clarity and investor engagement.
• Repayment Framework: The EU plans to gradually repay its total debt starting no later than 2028, with full repayment expected by the end of 2058. The annual repayment ceiling is set at 7.5% of the maximum NGEU expenditure amount (€390 billion).

Key Elements of the Strategy

• Annual Borrowing Decisions: The Commission publishes annual borrowing decisions that set the volume and profile of debt to be issued, including maturity and amount per issuance.
• Funding Plans: Twice-yearly funding plans provide more detailed information on upcoming issuances and help manage liquidity and investor expectations.
• Guarantees and Own Resources: The EU has increased its debt guarantee capacity by 0.6% of GNI, and plans to explore new own resources, such as digital and climate levies, to support long-term borrowing.

Risks and Opportunities

• Opportunities: NGEU offers the potential to create a European safe asset, which could enhance the EU's financial architecture and support the euro's international role. It also allows the EU to support climate and digital transitions.
• Risks: The EU must maintain strong market credibility and ensure that its borrowing strategy is fair, transparent, and unbiased. It also needs to balance its climate commitments with current market conditions to ensure sufficient investor interest.

Market Participation and Incentives

• Primary Dealer Obligations: PDNs are required to participate in auctions, manage syndications, and act as market-makers in secondary markets. They also provide insights into market conditions.
• Incentives: Financial incentives include fees for leading syndicated transactions and preferential auction access. Reputational benefits are also significant.
• Eligibility Criteria: Institutions must have a head office in the EU or EEA and be a primary dealer for another European sovereign issuer. Those in breach of antitrust laws are ineligible unless they have taken corrective actions.

Conclusion

NGEU borrowing is a transformative initiative for the EU, enabling it to issue large volumes of debt and potentially establish itself as a major issuer in global financial markets. The success of this strategy depends on the EU's ability to maintain a strong credit rating, ensure market liquidity, and manage its borrowing and repayment processes effectively. A well-functioning PDN and a diversified issuance strategy are crucial to achieving these goals and maximizing the benefits of EU-level borrowing.