The most eagerly awaited mandate of 2020 finally emerged on Monday as the European Union announced it has hired banks for a dual-tranche 10 and 20-year, a deal that will set the foundations for a multi-billion fundraising spree over the coming years.
Barclays, BNP Paribas, Deutsche Bank, Nomura and UniCredit won the coveted top spot for the debut social trade (Aaa/AA/AAA) under the EU's Support to mitigate Unemployment Risks in an Emergency – or SURE – programme.
Under the programme, the issuer will raise at least €87.4bn of social bonds by the end of 2021, while it will target another €800bn between 2021 and the end of 2026 under its Next Generation EU programme.
Expectations are that the EU will raise at least €15bn with this week's transaction, with another €15bn in two weeks' time and possibly more before the year is out.
"The more they can do this year, the better," a senior syndicate banker said. "It will alleviate the pressure on next year's funding. I think they could easily do between €35bn and €40bn by the end of year."
This pace of funding in such a short space of time has never been seen before by any supranational, which would typically raise this amount of funds over a year and in multiple markets.
"The market is extremely well prepared for this deal and I would be surprised if they didn't have a sovereign-style reception for the trade," the banker said.
"However, I expect they'll have larger real money and bank treasury components. This will get a very strong reception."