EU’s Bond Issuance program a ‘Game Changer’ for European Sustainable Financing

  • 21 October 2020 (5 min read)

The European Union’s decision to finance a third of its €750 billion Pandemic Recovery Fund with the issuance of green bonds marks a transformational ‘game changer’ in the development of deep and liquid ESG investment financing in the EU, to fight climate change and boost societal fairness, and its effects will ripple out across global capital markets, speakers at a recent webinar, hosted by Dutch institutional investor APG, predicted.

The Covid-19 Recovery Fund will turbocharge the emergence of a true European fixed income investment market, eventually creating a benchmark yield curve up to 30 years for the bloc’s debt and boost the euro’s role as an international reserve currency. The fund will also lift the EU’s projected GDP by 3% by 2027 compared with what it would otherwise have been after the pandemic, Gert Jan Koopman, Director General of the European Commission’s Budget Directorate said.

The €225 billion green bond issuance in the package will play a critical part in linking the fund to the EU’s ‘Green Deal’ ambition to make Europe climate neutral by 2050, he told at APG’s: EU Sustainable Recovery webinar. The Director General also announced that the European Commission will issue up to €100 billion in social bonds, starting this month, under its EU SURE bonds programme aimed at financing member states’ national short-time work schemes put in place as a response to the pandemic, in particular for the self-employed. The SURE issuance will triple the size of the European social bonds market.

Related Articles

Fixed Income

Dutch Pension Industry €1.5 trillion ESG ‘Green Swan’ Accelerating for European Take-off

  • by AXA Investment Managers
  • 27 August 2020 (5 min read)
Fixed Income

Using short duration as a liquidity tool

  • by Nicolas Trindade
  • 27 May 2024 (5 min read)
Fixed Income

How to capitalise on euro credit opportunities in evolving markets

  • by AXA Investment Managers
  • 13 May 2024 (5 min read)

    Not for Retail distribution

    This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MiFID Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date.

    All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document.

    Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.

    In the Netherlands, this document is intended for Professional Clients only, as defined by local laws and the MIFID directive, and is distributed by AXA IM Benelux- Netherlands  Branch, Beethoven 500 – 4th Floor, Beethovenstraat 518 – 1082 PR Amsterdam - the Netherlands.