REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Semi-annual report on the execution of the NextGenerationEU funding operations pursuant to Article 12 of Commission Implementing Decision C(2021)2502 June - December 2021
Date: 2022-02-17
Institutions: Directorate-General for Budget, European Commission
Subjects: EU aid, EU financial instrument, European Commission, bond, capital market, economic recovery, issue of securities

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.2.2022  COM(2022) 43 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Semi-annual report on the execution of the NextGenerationEU funding operations pursuant to Article 12 of Commission Implementing Decision C(2021)2502       June - December 2021        
 
 
Table of Contents 

1. 

2. 

3. 

4. 

Introduction .................................................................................................................. 3 

Main outcomes of the NextGenerationEU funding programme .................................. 3 

Setting-up and implementing the NextGenerationEU Funding Strategy ..................... 6 

Conclusion.................................................................................................................. 11 

Annex. Overview of bond and bill issuances ........................................................................... 12 

EN 

  EN 

 
 
 
 
 
NextGenerationEU funding  
at 31 December 2021 

15-year maturity 

€12 billion 
Green Bonds 

30-year maturity 

€6 billion 

20-year maturity 

€10 billion 

10-year maturity 

€20 billion 

7-year maturity 
€11.5 billion 

5-year maturity 
€11.5 billion 

3-month 
6-month 

Issued 

€11.5 billion 

Outstanding 

€11.5 billion 

€13.5 billion 

€8.5 billion 

Matured 

€5 billion 

Long-term borrowing 

€71 billion EU-bonds 
of which €12 billion green 

Short-term borrowing 

€25 billion issued in 3- and 6-months EU-Bills 
of which €20 billion still outstanding 

KEY FACTS 

  KEY FACTS 

•  5 syndications, 2 auctions 
•  Average cost of funding 0.14% 
•  7 to nearly 14 times oversubscribed 

•  7 auctions 
•  Average yield -0.78% 
•  Bid-to-cover ratio of 2.55x 

Use of proceeds 
at 31 December 2021

Other programmes 
under the EU budget 

€46.4 billion 

€18.0 billion 

€8.6 bn(1) 

Recovery and Resilience Facility 
grants to EU Member States  

Recovery and Resilience Facility 
loans to EU Member States 

KEY FACTS 

•  20 Member States received grants and loans under the RRF(2) 
•  Payments within 6 days of signing the Loan and Financing Agreements 

(1) Budget available to Horizon Europe, InvestEU Fund, ReactEU, the Union Civil Protection Mechanism (RescEU), the 
European Agricultural Fund for Rural Development (EAFRD), and the Just Transition Fund. Actual disbursements to final 
beneficiaries may be lower, due to timing differences. 
(2) The Recovery and Resilience Plans of 22 Member States had been approved by the end of 2021, but one Member State 
received pre-financing in January 2022 and one Member State did not request pre-financing. 

1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.  Introduction  

NextGenerationEU  represents  a  groundbreaking  funding  programme,  able  to  mobilise  up  to 
5% of EU GDP through borrowing to finance a collective and powerful  EU response to the 
COVID-19  pandemic.  NextGenerationEU  is  a  temporary  instrument,  under  which  the 
Commission  can  raise  up  to  EUR  800  billion  between  mid-2021  and  2026  through  the 
issuance  of  bonds.  The  proceeds  of  this  bond  issuance  will  allow  the  EU  to  overcome  the 
immediate recovery challenges but also to accelerate the green transition and the digitalisation 
of  the  EU  economy.  Up  to  EUR  250  billion  will  be  raised  through  the  issuance  of 
NextGenerationEU green bonds. NextGenerationEU entails annual bond issuance of on average 
up to roughly EUR 150 billion per year between mid-2021 and 2026, making the EU one of 
the largest issuers of euro-denominated debt for the coming years. 

This  report  –  the  first  semi-annual  report  pursuant  to  Article  12  of  Commission  Implementing 
Decision  C(2021)2502  –  reviews  the  implementation  of  the  NextGenerationEU  funding  strategy 
during the period June – December 2021. The report focusses solely on the process implemented to 
raise and disburse the funding for NextGenerationEU. It does not evaluate how the proceeds have 
been used, including on green expenditures, as that will be covered in separate reporting exercises in 
accordance with the Regulations of each NextGenerationEU funded instrument. This report forms 
one  part of  a  regular  flow of information  to  the  European  Parliament  and Member States on the 
implementation  of  this  large-scale  and  innovative  funding  programme.  Transparency  and 
accountability are hallmarks of the NextGenerationEU funding operations. 

2.  Main outcomes of the NextGenerationEU funding programme 

The  past  12  months  have  seen  a  transformation  in  the  standing  of  the  Commission  in  debt 
capital  markets.  Before  the  start  of  SURE1  and  NextGenerationEU,  the  Commission  was  a 
small  and  irregular  issuer,  raising  limited  volumes  (on  average  EUR  2-3  billion  over  the 
period  2015-2019)  to  finance  lending  programmes  such  as  the  European  Financial 
Stabilisation  Mechanism  (EFSM)  and  Macro-financial  assistance  (MFA).  In  the  course  of 
2021,  the  Commission  raised  some  EUR  130  billion  -  over  EUR  50  billion  for  the  SURE 
programme,  EUR  71 billion for NextGenerationEU of which  EUR  12 billion in  the form  of 
green  bonds,  and  EUR  12  billion  for  other  lending  programmes.  As  part  of  the 
NextGenerationEU  funding  programme,  the  Commission  has  also  initiated  the  EU-Bill 
programme, under which EUR 20 billion in short-term debt was outstanding at 31 December 
2021. The Commission has quickly emerged as one of the biggest issuers of new debt in euro 
and has become the biggest green bond issuer globally.  

All  NextGenerationEU  transactions  attracted  high  investor  demand  and  were  concluded  on 
advantageous terms for the EU budget and Member States. The average cost of funding for all 
NextGenerationEU issuance conducted in 2021 amounts to 0.14% across maturities from 5-30 
years.  Conditions  compared  favourably  to  those  achieved  by  highly-rated  core  euro-area 
sovereigns. The benefits of these attractive funding conditions are passed on to the EU budget 
or to Member States receiving Recovery and Resilience Facility (RRF) loans.  

1  SURE  is  temporary  support  available  to  Member  States  that  need  to  mobilise  significant  financial  means  to 
fight the negative economic and social consequences of the coronavirus outbreak on their territory.  SURE can 
provide financial assistance up to €100 billion in the form of loans from the EU to affected Member States to 
address sudden increases in public expenditure for the preservation of employment. The legal basis for SURE 
is:  Council  Regulation  (EU)  2020/672  of  19  May  2020  on  the  establishment  of  a  European  instrument  for 
temporary  support  to  mitigate  unemployment  risks  in  an  emergency  (SURE)  following  the  COVID-19 
outbreak (OJ L 159, 20.5.2020, p. 1). 

2 

 
 
                                                 
The Commission’s ability to raise funds on these favourable terms is reinforced by the steady 
issuance  of  large  volumes  of  NextGenerationEU  bonds  across  a  wide  range  of  maturities. 
These characteristics of the issuances permit increased liquidity in the secondary markets for 
NextGenerationEU  bonds,  which  makes  it  easier  for  investors  to  buy  and  sell  these  bonds. 
This makes it increasingly attractive for investors to trade NextGenerationEU bonds, which in 
turn  leads  to  better  pricing  of  NextGenerationEU  issuance.  Liquidity  of  NextGenerationEU 
bonds approaches levels for core Euro Area sovereigns as measured by standard metrics.2  

The  first  syndicated  transaction  took  place  on  15 June  2021,  two  weeks after  the  entry  into 
force of the Own Resources Decision3 and was followed swiftly by two more. This immediate 
large-scale  activation  of  the  funding  programme  during  summer  2021  allowed  the 
Commission to make all disbursements under the EU Recovery Plan to Member States4 and to 
the budget as soon as they fell due. As of 31 December 2021, the Commission has disbursed 
EUR 64.3 billion to 20 Member States under the RRF: EUR 46.4 billion in the form of grants, 
EUR 18 billion in the form of loans. All disbursements have taken place within six working 
days  after  the  signing  of  the  Financing  and  Loan  Agreements.  This  timely  and  efficient 
disbursement of funds was facilitated by the European Central Bank which holds the central 
NextGenerationEU  accounts.  In  addition  to  the  amounts  transferred  to  the  RRF,  more  than 
EUR  8.6  billion  has  been  transferred  from  the  NextGenerationEU  funding  pool  to  the  EU 
budget to fund top-ups for NextGenerationEU-funded programmes such as Horizon Europe, 
InvestEU  Fund,  ReactEU,  the  Union  Civil  Protection  Mechanism  (RescEU),  the  European 
Agricultural Fund for Rural Development (EAFRD), and the Just Transition Fund. 

The ability of the Commission to scale-up its bond issuance so quickly was due in large part 
to the strong and compelling narrative around the EU Recovery Plan. The willingness of all 
Member  States  to  stand  behind  –  via  their  contribution  to  future  EU  budgets  -  the 
NextGenerationEU funding programme was the most powerful expression possible of Union 
solidarity and ambition in response to the crisis. This strong political cohesion, complemented 
by  the  EU’s  strong  credit  rating,  was  decisive  in  convincing  European  and  international 
investors of the inherent soundness of this new NextGenerationEU debt. 

Implementing  a  bond  issuance  programme  of  this  scale  also  required  the  Commission  to 
build,  almost  from  scratch,  a  new  funding  apparatus  capable  of  running  large-volume 
transactions  on  a  regular  basis.  While  the  seven  large  SURE  transactions  (for  a  combined 
issuance  of  EUR  90  billion)  had  provided  a  valuable  dress-rehearsal,  NextGenerationEU 
called for a more structured and durable capacity. The blueprint for this strategy was defined 
in  a  Communication5  and  a  set  of  Decisions  adopted  on  14  April  2021,  which  laid  the 
foundations for the NextGenerationEU funding programme. The pictogramme below  recalls 
the  main  milestones  in  building  the  Commission’s  capacity  to  implement  a  sovereign-style 
diversified funding strategy.  

2  During Q2-Q3 2021, monthly turnover in the secondary market amounted to 15% of the outstanding NGEU 

debt. This ratio is comparable to that observed in the most liquid Euro Government Bond markets. 

3  Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the 

European Union and repealing Decision 2014/335/EU, Euratom (OJ L 424, 15.12.2020, p. 1). 

4  This enabled 20 Member States to obtain pre-financing of their grants, 5 Member States to obtain pre-

financing of their loans, and Spain to obtain the payment of its first grant instalment. 

5  Communication COM(2021)250 on a new funding strategy to finance NextGenerationEU (published on 14 

April 2021). See com2021_250_en_act_part1_v3.pdf (europa.eu). 

3 

 
                                                 
Figure 1: Key steps in setting up the NextGenerationEU (NGEU) funding operations  

14 April 

Adoption 
Diversified 
Funding 
Strategy 

1 June 

15 June 

7 September 

12 October 

Adoption 
annual 
borrowing 
Decision 

Inaugural 
NGEU 
issuance 
(€20 billion) 

Publication 
Green Bond 
Framework 

Inaugural 
green bond 
issuance  
(€12 billion) 

31 May 

Launch 
Primary 
Dealer 
Network 

1 June 

Publication 
first 
Funding 
Plan 

1 September 

Chief Risk 
Officer takes 
up office 

15 
September 

Inaugural   
EU-Bill 
auction 

Achieving these milestones required a number of key enablers, including: 

1.  The  reliable  forecasting  of  RRF  disbursement  needs  as  the  starting  point  for  sound 

planning of the bond issuances; 

2.  The  establishment  of  the  Primary  Dealer  Network  in  May  2021  to  facilitate  the 
efficient execution of auctions and syndicated transactions and support liquidity in the 
secondary  market  for  NextGenerationEU  bonds.  By  end  2021,  42  banks  and 
investment firms established in 12 different Member States had been admitted to the 
network6.  This  includes  all  major  players  active  in  the  placement  of  sovereign  and 
Sovereign,  Supranational  &  Agency  (SSA)  debt.  This  pan-European  primary  dealer 
network allows the EU to place EU bonds and bills with the widest possible investor 
base – inside and outside the EU; 

3.  The  launch  of  a  tailor-made  auction  platform  for  EU-Bill  and  bond  auctions  in 
September 2021, using the TELSAT system of the Banque de France. Auctions are a 
cost-effective way of issuing debt in the form of EU-Bill and bonds; 

4.  The creation of a strong governance framework to oversee the sustained execution of 
funding operations in a manner that minimises key risks and ensures full transparency 
and accountability. The blueprint for the NextGenerationEU funding operations, as set 
out  in  the  April  2021  Governance  Decision7,  accords  a  central  place  to  the 
identification  and  mitigation  of  risks.  A Chief  Risk  Officer  (CRO),  in  office  since  1 

6  A 43rd institution has since been admitted. The latest list can be found on the Commission website:  Primary 

Dealer Network | European Commission (europa.eu). 

7  Commission Implementing Decision of 14 April 2021 establishing the necessary arrangements for the 

administration of the borrowing operations under Council Decision (EU, Euratom) 2020/2053 and for the 
lending operations related to loans granted in accordance with Article 15 of Regulation (EU) 2021/241 of the 
European Parliament and of the Council; C/2021/2502 final. 

4 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
September 2021, has been appointed to provide independent oversight of all aspects of 
the  NextGenerationEU  funding  programme,  on  the  basis  of  the  NextGenerationEU 
High Level Risk and Compliance Policy adopted in December 2021. The Chief Risk 
Officer is supported in the implementation of this policy by the Risk and Compliance 
Committee which met for the first time in December 2021.  

5.  The  publication  of  the  NextGenerationEU  Green  Bond  Framework  in  September 
2021.  The  framework,  based  on  the  RRF  Regulation8,–  and  also  integrating  many 
aspects  of  the  EU  Green  Bond  Standard  and  the  Taxonomy,  –  identifies  nine  broad 
categories of eligible expenditure: renewable energy, digital technologies for the green 
transition, energy efficiency, clean transport, climate change adaptation, water, waste, 
biodiversity,  and  R&I  supporting  the  green  transition.  The  framework  has  been 
reviewed by a second party opinion provider. The first green bond issuance took place 
on  12  October  2021,  raising  EUR  12  billion  to  be  used  exclusively  for  green  and 
sustainable  investments  across  the  EU.  The  inaugural  green  bond  was  more  than  11 
times  oversubscribed,  attracted  interest  from  a  wide  range  of  investors,  and  remains 
the world's largest green bond issuance to date.  

3.  Setting-up and implementing the NextGenerationEU Funding Strategy 

This section of the report examines the progress in developing the eight capabilities that were 
identified  in  the  above-mentioned  Communication  of  14  April  2021  as  being  critical  to  the 
successful delivery of this funding programme. 

Structured planning and communication of issuance intentions 

3.1 
The NextGenerationEU funding programme is based on a structured approach to the planning 
of its issuance activities in annual and 6-monthly cycles. This planning is underpinned by the 
provision  of  detailed  information  on  Recovery  Plan  disbursement  needs,  which  are  updated 
on a regular basis. 

This  cycle  commences  with  an  annual  borrowing  Decision  to  set  an  upper  bound  for  the 
amount  of  bond  issuance  and  outstanding  debt  under  the  EU-Bill  programme.  These  key 
dimensions  provide  a  firm  anchor  for  the  Commission  as  it  organises  the  borrowing 
operations. The 2021 annual borrowing Decision allowed the Commission to issue in 2021 up 
to  a  maximum  amount  of  EUR  125  billion  in  long-term  funding  and  up  to  a  maximum 
outstanding amount of EUR 60 billion in short-term funding.  

The  Commission  then  prepares  a  funding  plan  to  fix  the  issuance  calendar  and  the  key 
financial parameters of the upcoming transactions. This information is communicated publicly 
as investors need it in order to prepare to allocate funds to Commission transactions, thereby 
facilitating  the  successful  absorption  of  NextGenerationEU  issuance  at  lower  cost.  The  first 
NextGenerationEU funding plan set a target of EUR 80 billion in EU bonds. 

8  All spending has to respect the do-no-significant-harm (DNSH) principle for other environmental objectives. 

To achieve this, Member States agree in the Finance and Loan Agreements to regularly report on 
expenditures linked to green investments. 

5 

 
 
                                                 
 
The  Commission  adopted  its  annual  borrowing  Decision9  and  published  its  first  funding 
plan10 on the same day as the entry into force of the Own Resources Decision – 1 June 2021. 

Disbursements to Member States under the RRF – which accounts for 90% of payments under 
NextGenerationEU – are subject to some uncertainty as regards the exact timing and amounts. 
Where  actual  disbursement  needs  deviate  from  original  forecasts,  there  may  be  a  need  to 
revise the funding plan. Such a revision of the H2 2021 funding plan took place in November 
2021  when  the  funding  target  was  revised  slightly  downwards  reflecting  an  updated 
assessment of the payment needs under the NextGenerationEU recovery instrument11. On the 
basis of this revised target, the Commission issued EUR 70.992 billion euro in bonds in 2021. 
All  NextGenerationEU  bond  and  bill  issuances  that  took  place  in  2021  are  included  in  the 
Annex to this report. 

On 14 December 2021, the Commission published the 2022 annual borrowing Decision12 and 
the  funding  plan  and  issuance  calendar  for  January  to  end-June  202213.  The  2022  annual 
borrowing  Decision  allows  the  Commission  to  issue  in  2022  up  to  a  maximum  amount  of 
EUR 140 billion in long-term funding and up to a maximum outstanding amount of EUR 60 
billion  in  short-term  funding.  The  H1  2022  funding  plan  foresees  the  issuance  of  EUR  50 
billion of long-term EU-Bonds between January and June 2022, to be complemented by short-
term EU-Bills. The H1 2022 funding plan was adopted following a review by the Chief Risk 
Officer. 

The NextGenerationEU issuance planning also takes into account the longer-term perspective 
that is  needed to  allow for a steady  and progressive repayment of the debt  as it matures.  In 
line with  the requirements of the Own Resources Decision, the Commission is  planning the 
maturities of its issuance and the related repayments in such a way that there will be a steady 
and predictable decline of NextGenerationEU liabilities over the period to 2058. 

Effective coordination with national and peer issuers 

3.2 
The publication of the 6-monthly funding plans, including the issuance calendar, has been an 
important instrument to coordinate with supranational and national debt management offices 
who also run large issuance programmes to meet their funding needs. 

In addition, the Commission has provided on several occasions information to the European 
Parliament  BUDG  Committee  and 
the  Economic  and  Financial  Committee  about 
NextGenerationEU  funding  operations.  It  participates  in  meetings  of  the  Economic  and 
Financial  Committee's  Sub-Committee  on  EU  Sovereign  Debt  Markets  (ESDM),  where  the 
implementation of the NextGenerationEU funding programme is a regular agenda-item.  

Strong liquidity management to match inflows and outflows 

3.3 
A  key  yard-stick  for  the  success  of  NextGenerationEU  is  the  ability  of  the  programme  to 
disburse  all  amounts  as  and  when  they  fall  due  for  payment  (or  repayment)  and  to  avoid 
having  to  raise  funds  in  inopportune  market  conditions.  A  proactive  approach  to  the 
management of liquidity and the ability to raise funds on attractive terms at short notice are 
critical in this regard. 

9   Commission Implementing Decision of 1 June 2021 establishing the framework for borrowing and debt 

management operations under NextGenerationEU for 2021 C/2021/3991 final. 

10 factsheet_funding_plan_jan-jun-2022.pdf (europa.eu) 

11 factsheet_funding_plan_v7.pdf (europa.eu) 
12 Commission Implementing Decision of 14 December 2021 establishing the framework for borrowing and debt 

management operations under NextGenerationEU for 2022 C/2021/9336 final. 

13 factsheet_funding_plan_jan-jun-2022.pdf (europa.eu) 

6 

 
                                                 
 
 
Since  the  start  of  the  funding  operations,  the  Commission  has  been  holding  a  variable 
prudential cash buffer as an important safeguard against liquidity shortfalls that could prevent 
the  Commission  from  meeting  disbursement  requests  in  a  timely  manner.  To  manage  these 
liquidity holdings, the Commission set up an account at the ECB in 2021, so that these critical 
cash holdings are not subject to counterparty risk. 

This liquidity buffer has been supported by the use of the full range of instruments under the 
diversified  funding  strategy  that  provide  the  Commission  the  flexibility  needed  to  match 
inflows and outflows. This included in July/August 2021 the use of credit lines. These credit 
lines enabled the Commission to meet all payment requests from Member States for the pre-
financing  of  their  Recovery  and  Resilience  Plans  over  the  summer  while  avoiding  an 
oversupply of bonds to an illiquid market. The amounts raised through these credit lines have 
now been fully repaid. 

Since September 2021, the Commission has been able to use the EU-Bill programme to raise 
liquidity  on  competitive  terms.  Between  15  September  and  31  December  2021,  the 
Commission  organised  seven  EU-Bill  auctions,  raising  EUR  25  billion  via  3-month  and  6-
month EU-Bills, of which EUR 5 billion matured in December 2021. The weighted average 
yield  obtained  for  the  auctions  was  -0.78%  and  the  average  bid-to-cover  ratio  (being  the 
demanded amount compared to the offered amount in an auction) stood at 2.55x. Both metrics 
indicate  strong  demand  from  the  Primary  Dealers  in  our  network  and  point  to  strong  short-
term funding operations. 

By equipping itself with these means to manage liquidity, the Commission was able to meet 
all payment requests within six days.  

Strong execution capability to carry out individual funding operations 

3.4 
The Commission has strengthened its funding execution capabilities, enabling it to use a mix 
of transaction formats to meet the NextGenerationEU funding needs: in the first six months, 
the Commission  used  five syndicated transactions,  two bonds and  seven bills  auctions, new 
issuances and taps, and credit lines. 

The two most important elements of this enhanced capability were: 

a) Setting up a pan-European Primary Dealer network 

Following the launch of a call for interest,14 the Commission published on 31 May 2021 a list 
of 39 banks and investment firms that had successfully applied to its Primary Dealer Network. 
Inscription  is  open  on  a  rolling  basis  to  members  of  national  or  other  EU  primary  dealer 
networks. As of 31 December 2021, the Commission had 42 banks and investment firms as 
EU Primary Dealers, located in 12 Member States, with different business models, including 
all major players in the placement of sovereign and SSA debt, and with operations all over the 
world. 

The Commission maintains a dialogue with the Primary Dealers (including through structured 
feedback). It also ensures that the selection of Primary Dealers for syndicated transactions is 
based  on  rigorous  application  of  quantitative  and  qualitative  criteria,  complemented  by  the 
application  of  a  rotation  factor  to  ensure  that  it  is  not  always  the  same  banks  that  are 
mandated.  

14  Commission Decision (EU, Euratom) 2021/625 of 14 April 2021 on the establishment of the primary dealer 
network and the definition of eligibility criteria for lead and co-lead mandates for syndicated transactions for 
the  purposes  of  the  borrowing  activities  by  the  Commission  on  behalf  of  the  Union  and  of  the  European 
Atomic Energy Community. 

7 

 
                                                 
b) Setting up a state-of-the-art auction platform 

With  the  support  of  Banque  de  France,  the  Commission  has  set  up  in  2021  an  auction 
platform  for  EU-Bills  and  bonds.  The  Primary  Dealers  were  connected  to  the  Banque  de 
France’s TELSAT system over the course of the summer 2021, allowing the Commission to 
launch  the  first  EU-Bill  auction  on  15  September  2021  and  the  first  bond  auction  on  27 
September 2021. 

The  auction  platform  has  allowed  the  Commission  to  establish  a  regular  programme  of 
auctions, alongside its syndicated transactions.  

Between  15  September  and  31  December  2021,  the  Commission  organised  seven  EU-Bill 
auctions, raising EUR 25 billion via 3-month and 6-month EU-Bills, of which EUR 5 billion 
matured  in  December  2021.  In  addition,  the  Commission  raised  EUR  5  billion  through  two 
bond auctions. 

3.5  Robust governance and risk management systems 
The  Commission  has  established  a  clear  and  robust  governance  framework  to  structure  the 
core decision-making processes (e.g. annual borrowing Decision), implementation modalities 
(funding  plan)  and  capacities  (e.g.  syndicated  transactions  and  auctions)  of  the  funding 
operations and to  ensure robust and independent  oversight.  These have been commented on 
above. 

The  need  to  identify,  minimise  and  manage  remaining  risk  is  built  into  every  key  business 
process  in  the  NextGenerationEU  funding  programme.  Recourse  to  a  diversified  funding 
strategy  is  in  itself  a  means  of  mitigating  the  risks  of  being  unable  to  fund  Recovery  Plan 
needs  on  time  or  on  reasonable  terms.  In  order  to  ensure  a  sustained  and  keen  focus  on 
minimising risk, the Commission has appointed a Chief Risk Officer (CRO) and Compliance 
Officer, established a Risk and Compliance Committee that supports the CRO, and adopted a 
High Level Risk and Compliance Policy.  

In June 2021 the Commission appointed the CRO, who took office on 1 September 2021. The 
CRO has drawn up a High Level Risk and Compliance Policy, that has been endorsed by the 
Risk  and  Compliance  Committee  and  approved  by  the  Commissioner  for  Budget  and 
Administration,  Johannes  Hahn  on  1  December  2021.  This  policy  comprises  an  appropriate 
risk  management  and  compliance  framework  for  the  oversight  of  the  risks  and  compliance 
matters arising from the implementation of NextGenerationEU borrowing, debt management 
and  lending  operations  and  sets  the  appropriate  mitigation  measures  and  monitoring 
procedures.  The  CRO  ensures  that  the  policy  is  implemented  in  a  comprehensive  and 
consistent  manner,  and  reports  annually  to  the  Commission  on  the  implementation  of  this 
policy. 

Fit-for-purpose back-office, payment and accounting solutions 

3.6 
The  Commission  has  reinforced  its  back-office  and  accounting  functions  to  ensure  the 
efficient execution, auditability and accountability of all transactions. More specifically: 

-  The Commission has adapted its transaction recording and booking system in-time so 
that all borrowing and lending transactions have been properly recorded in the system 
since the start of the NextGenerationEU funding operations in June 2021. 

-  Together with the ECB the Commission has included the data of Member States in the 
payment systems and tested these with Member States so that all payments to Member 
States can be processed securely, swiftly, and at any time.  

-  The  Commission  updated  the  Debt  Issuance  Programme  (DIP)  of  the  EU  and 

EURATOM on 4 June 2021 to, inter alia, include auctions. 

8 

 
-  Together  with  its  Issuer  Agent  the  Commission  set  up  new  procedures  for  auctions 
which has led to the smooth processing of all primary transactions on the settlement 
date.  

-  The Commission prepared the booking system so that the financial statements can be 
produced properly and can be audited by the external auditor in a timely manner. 

3.7  Attractive Recovery and Resilience Facility loans 
Under NextGenerationEU, the Commission is empowered to issue up to EUR 385 billion to 
finance RRF loans to Member States. By the end of 2021 almost 40% of the total RRF loan 
envelope  has  been  allocated  to  six  Member  States15  whose  loan  applications  have  been 
approved. Member States can request loan support until 31 August 2023.  

The terms offered on these loans were highly advantageous, thanks to the EU’s highly rated 
issuances and strong investor demand (with the bond syndications being 7 to nearly 14 times 
oversubscribed). Other terms and conditions of the loans to borrowing Member States are also 
designed  to  make  them  an  attractive  source  of  state  financing.  Member  States  will  make 
amortised repayments, starting after a grace period of 10 years, thus allowing Member States 
to  benefit  from  the  growth  triggered  by  reform  and  investment  before  commencing 
repayment. Following the initial grace period, Member States will make annual repayments of 
5%  of  the  disbursed  amounts.  This  spreading  of  repayment  over  time  will  avoid  peak 
repayment periods for both the EU budget and Member States. This approach to structuring 
loans will be implemented in the same way for all Member States receiving loans.  

In July 2021, the Commission published a Decision16 that sets out how the costs incurred for 
the NextGenerationEU funding pool are allocated to Member States receiving RRF loans and 
the  EU  budget.  The  relevant  costs  are  allocated  to  borrowing  Member  States  and  the  EU 
budget on the basis of their relative share of received financial support. This cost allocation 
methodology  and  its  implementation  will  ensure  an  objective,  fair  and  clearly  documented 
basis  for  calculating  and  allocating  the  respective  share  of  all  costs  to  the  EU  budget  or 
Member States receiving RRF loans. 

Effective communication and investor outreach 

3.8 
Since the start of the NextGenerationEU funding operations, the Commission has developed a 
comprehensive  investor  relations  strategy  and  a  series  of  tools  to  connect  with  its  investor 
base: 

-  On  the  day  of  the  presentation  of  its  diversified  funding  strategy,  the  Commission 
launched a comprehensive website17 to inform all interested parties, the general public 
and investors about its funding operations. 

-  The  Commission  started  issuing  “EU  borrowing  for  the  recovery”  newsletters, 
allowing the Commission to communicate to the investor community in a regular and 
transparent manner. The first two editions of the newsletter are available online on the 
EU as a borrower website, and subscription is open to all interested parties. 

-  The Commission reached out actively to investors across the globe through structured 
visits (“road shows”), organised global investor calls in June and September 2021, and 
held three Primary Dealer Network meetings. 

-  The Commission maintains its own page on the Bloomberg terminal, where it offers 

real time information about its auctions to the investment community.  

15  Cyprus, Greece, Italy, Portugal, Romania and Slovenia. 
16  Commission  Implementing  Decision  (EU)  2021/1095  of  2  July  2021  establishing  the  methodology  for 
allocating  costs  related  to  borrowing  and  debt  management  operations  under  NextGenerationEU 
C/2021/4864 

17  The EU as a borrower – investor relations | European Commission (europa.eu). 

9 

 
                                                 
-  To  keep  the  wider  audience  informed  about  its  work,  the  Commission  prepares  and 
disseminates  regular  press  material  –  always  available  online  on  its  website,  and 
provides  real-time  information  via  social  media  –  Twitter,  LinkedIn.  Commissioner 
Johannes  Hahn  and  European  Commission  experts  regularly  spoke  to  the  press  to 
provide further information.  

-  With the help of the European Investment Bank (EIB) the Commission is setting up an 
Investor  Relations  database,  which  will  help  the  Commission  to  manage  its 
relationships  with  investors  in  a  structured  way  by  actively  monitoring  investor 
behaviour  and  trends,  in  order  to  identify  necessary  market  and  investor  outreach 
actions and produce statistics for management and communication purposes. 

4.  Conclusion 

In the past 12 months, the Commission moved from being a small issuer, raising funds  to finance 
relatively small lending programmes like the European Financial Stabilisation Mechanism (EFSM) 
and Macro-financial assistance (MFA), to being one of the biggest issuers in euro. It issued EUR 130 
billion during 2021 (EUR 71 billion for NextGenerationEU) and may issue in the region of EUR 150 
billion per annum in the period 2021-26. 

All infrastructure and processes needed to implement this large-scale funding programme were put in 
place in record time. This allowed NextGenerationEU funding to commence on 15 June 2021, two 
weeks after the fulfilment of all legal conditions to start this borrowing programme. All amounts due 
to  the  EU  budget  or  Member  States  were  paid  within  six  working  days  of  the  completion  of 
formalities.  No  delays  were  experienced.  All  NextGenerationEU  transactions  were  executed  in  a 
technically  proficient  manner  and  enjoyed  very  strong  market  support  (order-books  being  over-
subscribed by 7-14 times). Transactions were closed on favourable terms (an average of 0.14% cost of 
funding for the 2021 transactions), and EU bonds now trade on a par with core euro-area sovereigns 
(rather than other SSA issuers).  

These results represent a very encouraging start for the NextGenerationEU programme. The priority 
for the coming years will be to build on this good start and deliver a sustained high level of execution 
across all transactions. 

In conclusion, NextGenerationEU gives the EU a powerful tool to fund the recovery and emerge from 
the crisis more resilient, fairer and greener. It has also strengthened the international role of the euro, 
contributed to the development of European debt capital markets and reinforced the Banking Union, 
by  helping  banks  to  diversify  regulatory  capital.  The  implementation  of  the  instrument  over  the 
coming months and years represents an opportunity to consolidate these benefits. 

10 

 
Annex. Overview of bond and bill issuances 

Figure 1: Overview of the NextGenerationEU (NGEU) syndicated transaction and bond 
auctions 

Instrument 

Trading 
Date 

Settlement  
Date 

Maturity 

Amount Issued 
 (billion EUR) 

date 

years 

2021 Q2 

15-06-2021 

22-06-2021 

04-07-2031 

29-06-2021 

06-07-2021 

06-07-2026 

06-07-2051 

2021 Q3 

10 

5 

30 

13-07-2021 

20-07-2021 

04-07-2041 

20 

14-09-2021 

21-09-2021 

04-10-2028 

27-09-2021 

29-09-2021 

06-07-2026 

7 

5 

20 

9 

6 

10 

9 

2.495 

2021 Q4 

12-10-2021 

19-10-2021 

04-02-2037 

15.3 

12 

25-10-2021 

27-10-2021 

04-10-2028 

7 

2.497 

Total 

70.992 

NGEU #1 
syndication 

NGEU #2 
syndication 

NGEU #3 
syndication 

NGEU #4 
syndication 

Bond 
auction #1 

NGEU #5 
green bond 
syndication 

Bond 
auction #2 

11 

 
 
 
 
 
 
Figure 2: Overview of the EU-Bill auctions 

Instrument 

Trading  
Date 

Disbursement  
Date 

Maturity 

Amount Issued 
 (EUR) 

date 

months 

2021 Q3 

EU-Bill 
Auction #1 

EU-Bill 
Auction #2 

EU-Bill 
Auction #3 

EU-Bill 
Auction #4 

EU-Bill 
Auction #5 

EU-Bill 
Auction #6 

EU-Bill 
Auction #7 

15-09-2021 

17-09-2021 

22-09-2021 

24-09-2021 

03-12-2021 

3 months 

2.999.000.000 

04-03-2022 

6 months 

1.997.000.000 

03-12-2021 

3 months 

1.997.000.000 

04-03-2022 

6 months 

1.996.000.000 

2021 Q4 

06-10-2021 

08-10-2021 

20-10-2021 

22-10-2021 

03-11-2021 

05-11-2021 

17-11-2021 

19-11-2021 

01-12-2021 

03-12-2021 

07-01-2022 

3 months 

2.996.000.000 

08-04-2022 

6 months 

1.996.000.000 

07-01-2022 

3 months 

1.499.000.000 

08-04-2022 

6 months 

1.499.000.000 

04-02-2022 

3 months 

1.497.000.000 

06-05-2022 

6 months 

1.496.000.000 

04-02-2021 

3 months 

998.000.000 

06-05-2022 

6 months 

994.000.000 

04-03-2021 

3 months 

1.495.000.000 

03-06-2022 

6 months 

1.496.000.000 

12