The creditors charged the European Union (EU) an interest rate of 0.86% in the first debt operation to fund the recovery plan. Today’s issuance created new debt worth 20 billion euros.
The Finance Minister revealed that in the first debt operation aimed at funding recovery plans in several European countries, international creditors charged the European Union (EU) an average interest rate of 0.86%.
In a note sent to the newsroom, the office of Minister Joao Leon welcomed the “unprecedented moment” and “milestone in European history”, which is a significant increase in the debt of countries and the EU (at least another 800 billion euros). Funding projects should enable 27 member states to escape the devastating effects of the pandemic and restart economic growth in the next few years.
This Tuesday, “the first phase was invested at a rate of 20 billion euros [de juro] 0.086%”, João Leão’s notes said.
These government bonds have a ten-year maturity, which means they must be repaid in full in 2031. This year, the European Commission’s goal is to get a total of 80 billion euros in the market.
“The demand exceeds 142 billion euros, which is seven times the supply. The strong investor interest in the new bonds helped to reduce the first price indicator by three basis points,” the Portuguese Finance Minister also pointed out.
In other words, the interest rate is reduced by three percent (0.03%) compared to the initial price, which is important in a problem of this scale because it can generate high savings in debt service.
For the Minister of Finance, “The EU registered today [terça-feira, 15 de junho] This is an unprecedented moment for the first joint issuance of debt to fund the next generation of the European Union. This is an extraordinary European debt issuance tool that will provide member countries with 800 billion euros to fund the recovery and recovery (PRR) of countries.” .
This kind of debt and its supporting mechanism are considered to be “the core part of Europe’s response to the crisis caused by covid-19, and it is also the launch pad for the economic recovery of various countries.”
The Minister of Finance believes that “today is a milestone in our European history because of an unprecedented solution to the crisis together.”
Today’s issuance, valued at 20 billion euros of the total planned 800 billion euros, “assures us that funds will soon begin to enter the economy, coupled with the approval of the first recovery plan this week, will enable member states to begin implementation. The investment and reforms needed for economic recovery.”
The first expenditure of the recovery plan is expected to be paid within one and a half months to two months in August.
On Wednesday, the President of the European Commission Ursula von der Lein went to Portugal and Spain to announce the final approval of their respective PRRs.
On Thursday, he will move on and will do the same in Greece and Denmark. On Friday, it was Luxembourg’s turn. Next week, the RRP tour of the remaining countries should continue.
“After all member states have approved their own resource decision in record time, we are very pleased to be able to go one step further during Portugal’s presidency of the Council of the European Union”, congratulations to Joao Leon.