The European Union is issuing new bonds amid uncertainty over the inclusion of the bloc's debt in major sovereign indices and a surge in far-right parties that is undermining investor confidence in the French economy. UNN writes about this with reference to Bloomberg.
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The European Union has placed a 15-year syndicated debt offering, the first since MSCI Inc. concluded a consultation on whether to reclassify its supranational indices as sovereigns. The move is expected by investors to broaden the appeal of bonds if other index providers follow suit. The decision was expected last month but was postponed.
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Bloomberg notes that the sale took place the day after French President Emmanuel Macron shocked investors by calling early elections to challenge Marine Le Pen's rise to power. French debt led to a decline in European bonds.
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According to the publication, the EU has become one of the largest issuers in the region after it began to increase sales in 2020. At the same time, officials have expressed disappointment that the cost of its financing is not as low as in some eurozone member states. One of the reasons is the bloc's classification as a supranational issuer rather than a sovereign. Supranational indices are tracked by a smaller cohort of investors than sovereign indices.
An investor survey conducted by the EU last year showed that the inclusion of indices is "the only important step left to make EU bonds trade and value in the same way as European government bonds".
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