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 1 January 2022 - 30 June 2022
Date: 2022-07-08
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, 8.7.2022  COM(2022) 335 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             1 January 2022 - 30 June 2022              
 
 
Table of Contents 

1. 

2. 

3. 

4. 

5. 

6. 

Introduction .................................................................................................................. 2 

Implementation of the NextGenerationEU funding programme in the first semester 
of 2022 ......................................................................................................................... 2 

Cost of funding ............................................................................................................. 3 

Green bonds ................................................................................................................. 4 

Issuance outlook ........................................................................................................... 5 

Conclusion.................................................................................................................... 6 

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  EN 

 
 
 
 
 
NextGenerationEU funding at 30 June 2022  

Conventional  

30-year maturity 

€14 billion 

20-year maturity 

€10 billion 

10-year maturity 

10-year maturity 

€32.5 billion 

7-year maturity 

7-year maturity 

€14 billion 

5-year maturity 

€16.5 billion 

3-year maturity 

€6 billion 

Green 
25-year maturity 
€5 billion 
20-year maturity 
€6 billion 

15-year maturity 

€17 billion 

3-month 
6-month 

EU-Bills Outstanding 

€16.5 billion 

€6.5 billion 

Long-term borrowing  
€121 billion EU-bonds 
of which €28 billion green 

Short-term borrowing  
€57.9 billion issued in 3- and 6-months EU-Bills 
of which €22.9 billion still outstanding 

KEY FACTS of the first semester of 2022 

  KEY FACTS of the first semester of 2022 

•  5 syndications, 6 auctions, raising €50 billion 
•  Average cost of funding 1.24% 
•  5.9 to 16 times oversubscribed 

•  12 auctions 
•  Average yield -0.55% 
•  Bid-to-cover ratio of 1.63x 

Use of proceeds at 30 June 2022  

Other programmes
under the EU budget

€67,0 billion

€33,4 billion

€15,5 bn(1)

Recovery and Resilience Facility 
grants to EU Member States 

Recovery and Resilience Facility 
loans to EU Member States

KEY FACTS 
•  21 Member States received grants and loans under the Recovery and Resilience Facility.(2) 
•  6 Member States have also received a disbursement on the basis of the fulfilment of 

milestones and targets. 

(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 25 Member States had been approved by 30 June 2022.  

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1.  Introduction  

NextGenerationEU  aims  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, making the EU one of the largest issuers 
of euro-denominated debt for the coming years. Up to EUR 250 billion will be raised through 
the  issuance  of  green  bonds.  The  proceeds  of  the  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. To date, around EUR 100 billion in funds have already 
been disbursed to Member States under the Recovery and Resilience Facility (RRF)  and the 
implementation  of  the  Recovery  and  Resilience  Plans  is  generating  tangible  results  on  the 
ground, both for investments and reforms. 

This report – the second 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  1  January  2022  –  30  June  2022.  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  for  green  expenditure,  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 Council  providing transparency and accountability  on the implementation of this large-scale, 
innovative funding programme in accordance with Article 5 (3) of Council Decision 2020/2053. 

2.  Implementation of the NextGenerationEU funding programme in the first semester 

of 2022 

In December 2021 the Commission announced its funding plan for the period January - June 
2022  which  indicated  an  intended  issuance  of  EUR  50  billion  of  long-term  bonds,  to  be 
topped-up by short-term EU-Bills.  In line with this funding plan, the Commission has since 
the  start  of  the  year  raised  an  additional  EUR  50  billion  of  long  term  funding  for 
NextGenerationEU,  through  a  mix  of  syndicated  transactions  (70%)  and  auctions  (30%). 
These transactions have brought the total outstanding amount of NextGenerationEU bonds to 
EUR  121  billion,  of  which  EUR  28  billion  have  been  raised  through  the  issuance  of  green 
bonds. In this period, the Commission has also issued 3-month and 6-month EU bills to meet 
short-term funding needs, with EUR 22.9 billion in EU-Bills outstanding at the end of June 
2022. 

NextGenerationEU  issuances  in  the  first  six  months  of  2022  took  place  in  increasingly 
challenging market conditions. The EU and other major economies witnessed a sharp increase 
in  inflation  and  increased  market  volatility  exacerbated  by  the  economic  shocks  from  the 
Russian invasion of Ukraine. This has led to interest rates demanded by investors increasing 
at a historically rapid pace as markets anticipated less accommodative monetary policy. 

Despite  the  challenging  market  conditions,  NextGenerationEU  transactions  continued  to 
enjoy strong market support, with transactions in the first semester of 2022 being between 6 
and  16  times  oversubscribed.  The  EU  is  benefiting  from  a  well-balanced  and  diversified 
investor  base  with  good  representation  of  different  types  of  investors,  with  different  buying 
strategies, and from all across the world.1 This continued high-level demand demonstrates that 

1  

To  date,  EU  issuances  have  in  total  attracted  more  than  1000  different  investors  from  70  different 
countries. More than 60% of investors are located in the EU and about 25% are international investors 

2 

 
 
                                                 
the  Commission  has  established  itself  as  a  trusted  highly-rated  issuer  in  euro  debt  capital 
markets.  

Through this standing in the market, the EU has been able to continue the smooth funding of 
Member States’ recovery plans through timely disbursement of proceeds. As a result of these 
funding  operations  the  Commission  was  able  to  make  all  disbursements  to  Member  States 
under  the  Recovery  and  Resilience  Facility  and  to  the  EU  budget  as  soon  as  they  fell  due. 
Between  the  start  of  NextGenerationEU  in  the  summer  of  2021  and  30  June  2022,  the 
Commission  has  disbursed  EUR  100.4  billion  to  Member  States  under  the  Recovery  and 
Resilience Facility: EUR 67.0 billion in the form of grants and EUR 33.4 billion in the form 
of loans. In addition, more than EUR 15.5 billion have been transferred to the EU budget to 
contribute  to  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.2 

The success in mobilising this large volume of funds benefitted greatly from the flexibility of 
the meanwhile well-established diversified funding strategy. This allows the Commission to 
use a range of funding techniques (syndicates and  auctions) and funding instruments (bonds 
and bills) in order to access the markets by tailoring its approach to prevailing conditions. The 
increased possibility to tap outstanding bonds, through syndicated transactions and auctions, 
has helped to inject liquidity, supporting the secondary market for NextGenerationEU bonds 
and making it easier for investors to buy and sell them. NextGenerationEU bonds now exhibit 
liquidity comparable to that observed in the markets for European government bonds, relative 
to the amounts outstanding. 

3.  Cost of funding 

Despite the more challenging market conditions, the Commission has continued to be able to 
raise funds on relatively attractive terms. In line with the methodology set out in Commission 
Implementing Decision (EU) 2021/1095, cost of funding for the period January 2022 to end 
of  June  2022  is  estimated  to  be  around  1.24%.3  This  represents  an  increase  of  more  than  1 
percentage  point  compared  to  the  0.14%  cost  of  funding  reported  for  the  period  June  to 
December  2021.  This  sharp  increase  reflects  the  more  difficult  market  conditions  that  are 
affecting sovereign, corporate and financial issuers.  

The pace of increase has been one of the steepest witnessed in financial markets in the past 
decades.  Interest  rates  on  10-year  EU  bonds  have  increased  from  0.09%  at  the  time  of  the 
inaugural  10-year  NextGenerationEU  bond  in  June  2021  to  1.02%  for  the  March  2022 
transaction, and to 1.53% in the most recent issuance in May 2022. 10-year EU bonds traded 
around  2.3%  at  the  end  of  June  2022.  Comparable  increases  have  been  observed  for  core 
euro-sovereign  issuers.  For  example,  interest  rates  on  10-year  German  government  bonds 

operating  from  the  UK.  More  than  70%  of  the  issued  EU  bonds  have  been  going  to  buy-and-hold 
investors (i.e. fund  managers, insurance companies, pension funds and central banks). There is also a 
good representation of investors demanding different maturities, with central banks and bank treasuries 
(which  usually  prefer  to  invest  in  maturities  up  to  10  years)  accounting  for  36%  of  purchases  of  EU 
bonds  in  the  primary  markets  and  pension  funds  and  insurance  companies  (which  prefer  maturities 
above 10 years) accounting for around 20%. 
This amount  corresponds to the  transfers  made  from the  NextGenerationEU  funding pool.  The actual 
disbursements  from  the  Commission  to  the  final  beneficiaries  under  the  programmes  financed  by 
NextGenerationEU may be subject to timing differences. 
This figure may still be subject to minor changes due to the eventual closure of the time compartment, 
which requires the notional balancing of disbursements and allocated long-term funding instruments. 

2  

3  

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increased  from  around  -0.20%  in  June  2021  to  close  to  1.0%  in  May  2022,  and  were  over 
1.6% at the end of June 2022. 

By remaining a regular, predictable issuer through this period, the EU has been able to issue 
its bonds with a stable price concession at issuance. This coupled with the continued strong 
demand from investors is a sign of trust from the markets,  and provides confidence that the 
EU can continue to place its bonds successfully. 

The  Commission  has  also  continued  to  manage  its  short-term  cash  holdings  to  ensure  that 
they do not exceed amounts needed for the smooth execution of disbursements. Over the first 
semester of 2022, liquidity holdings were stable, averaging EUR 19.7 billion. This amount of 
liquidity was lower than in previous quarters, when larger amounts were necessary to be able 
to make fast and sizeable disbursements during the period of pre-financing (13% of) Member 
States’ recovery plans. These lower amounts of liquidity holdings, along with regular issuance 
of EU bills at negative rates have generated a surplus (i.e. positive carry) of EUR 56.1 million 
on the NextGenerationEU cash holdings from January to end-June 2022. This surplus, to be 
receiving 
shared  proportionately  between 
NextGenerationEU loans, will partly offset the higher costs of funding. 

the  EU  budget  and  Member  States 

The first  half of 2022  also  marked the beginning of NextGenerationEU-related invoicing of 
interest payments, liquidity management costs, and administrative costs to the EU budget and 
borrowing Member States. 

4.  Green bonds 

In 2022, the Commission continued the implementation of the NextGenerationEU green bond 
programme, building on the successful inaugural  NextGenerationEU green bond issuance in 
October 2021.   

The  Commission  executed  four  additional  green  bond  transactions  in  the  first  semester  of 
2022. In April 2022 and June 2022, a second and third green bond line were launched, raising 
respectively EUR 6 billion in the 20-year maturity and EUR 5 billion in 25-year maturity. The 
first transaction was more than 13 times oversubscribed and constituted the largest green bond 
issued  in  2022  to  date4.  In  addition,  the  inaugural  15-year  maturity  green  bond  was  tapped 
twice in January and April 2022, bringing its size to EUR 17 billion. 

The  experience  of  the  NextGenerationEU  green  bond  issuances  underlines  the  inherent 
attractiveness  of  bonds  with  a  strong  and  demonstrable  climate  transition  profile.  The 
Commission estimates that it has realised a greenium – i.e. the difference in price between a 
green bond and a conventional bond – of around 2 basis points on these issuances, which have 
traded  as  wide  as  4  basis  points  in  subsequent  trading.  These  figures  are  in  line  with  those 
observed more broadly across the market (Climate Bonds Initiative5).  

In  March  2022,  the  EU  also  launched  its  NextGenerationEU  green  bond  dashboard.6  The 
dashboard  provides  an  unparalleled  degree  of  transparency  to  investors  about  how  the 
financing  raised  via  NextGenerationEU  green  bonds  is  invested.  The  dashboard  provides  a 
real-time overview of the measures and related expenditures that receive financing from the 
green bonds. This data further reassures investors that the Commission is issuing green bonds 
in line with the highest standards and best market practices. Building on this dashboard, the 

4  
5  
6  

Germany also issued a EUR 6 billion green bond in April 2022.  
Green bonds offer pricing benefits to both issuers and investors | Climate Bonds Initiative 
NextGenerationEU Green Bond Dashboard | European Commission (europa.eu) 

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Commission  will  publish  towards  the  end  of  2022  an  annual  allocation  report,  to  provide 
more context and additional information.  

The  inherent  attractiveness  of  NextGenerationEU  green  bonds  as  evidenced  by  the  strong 
investor  demand,  reinforced  by  the  high  level  of  transparency  around  the  use  of  proceeds, 
provides  a  strong  platform  for  building  the  world’s  biggest  pipeline  of  green  bonds.  The 
NextGenerationEU green bond programme therefore provides a unique opportunity to build a 
highly liquid green bond curve. 

Figure 1: Screenshot of the NextGenerationEU green bond dashboard 

5.  Issuance outlook 

On 24 June, the Commission published its funding plan for the remainder of 2022. To finance 
NextGenerationEU,  the  Commission  intends  to  issue  EUR  50  billion  of  EU-bonds, 
complemented by short-term EU-bills. 

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The target for the bond issuance represents a reliable and conservative estimate based on the 
latest forecasts for the expected disbursements from NextGenerationEU in the second half of 
2022.  The  amounts  foreseen  include  scheduled  disbursements  under  recently  approved 
national  Recovery  Plans.7  As  actual  disbursements  will  be  based  on  regular  updates  of  the 
implementation  of  the  NextGenerationEU  recovery  instrument,  they  may  deviate  from 
forecasts  in  terms  of  precise  timing  and  amounts.  However,  any  deviations  should  not 
materially  affect  the  target  set  in  the  funding  plan  and,  based  on  experience  to  date  with 
NextGenerationEU,  are  most  likely  to  involve  changes  in  timing  of  disbursements.  In  the 
unlikely case of a substantial deviation of disbursements from forecasts, the Commission may 
amend the target set for bond issuance.  

While  the  funding  plan  focusses  on  the  financing  of  NextGenerationEU  disbursements,  the 
Commission has also provided an indication of the disbursements the Commission envisages 
to propose under other programmes, notably SURE and Macrofinancial Assistance (MFA) to 
third countries. This is done in order to provide investors with a comprehensive view of the 
amounts that the EU can be expected to bring to market based on current policy commitments 
and  expectations.  The  NextGenerationEU  funding  plan  for  the  second  half  of  2022  will 
therefore be implemented alongside transactions raising up to EUR 9 billion for the envisaged 
MFA  loans  to  Ukraine  and  up  to  EUR  6.6  billion  for  SURE.  These  transactions  will  be 
organised alongside the  issuance of NextGenerationEU debt,  through  an  integrated issuance 
programme  based  on  a  regular  monthly  cycle  of  syndicated  transactions  and  auctions.  In 
addition,  there  may  be  occasional  private  placements  to  finance  smaller  MFA  loans  to 
neighbouring countries.  

6.  Conclusion 

After  a  successful  start  in  2021,  the  past  six  months  have  demonstrated  the  Commission’s 
ability  to  execute  its  funding  operations  in  increasingly  difficult  market  circumstances.  The 
sustained  investor  support  for  NextGenerationEU  bonds  shows  that  the  EU  is  now  an 
established and trusted large-scale issuer in euro debt capital markets. The diversified funding 
strategy  –  consisting  of  the  techniques  (syndicates  and  auctions)  and  funding  instruments 
(bonds  and  bills)  used  by  sovereign  issuers  –  has  been  instrumental  in  navigating  volatile 
market circumstances. This enables the Commission to continue to support Member States on 
their road to recovery from the Covid-19 pandemic and to increase their resilience to future 
challenges. 

NextGenerationEU bonds were affected by the pronounced increase in interest rates over this 
period, which was also the case for sovereign, supranational and other bond issuers globally. 
The average cost of funding is more than one percentage point higher than over the past six 
months. However, NextGenerationEU bonds continue to price comparatively well, reflecting 
the  inherent  credit  quality  of  the  EU  and  strong  recognition  for  the  EU  as  a  value-oriented 
social and green issuer.  

The first six months of 2022 also saw a more than doubling of NextGenerationEU green bond 
issuances and the launch of the green bond dashboard - which allows real-time monitoring of 
how Member States use the funding raised via green bonds.  

The  funding  plan  for  the  second  half  of  2022  provides  a  comprehensive  and  accurate 
indication  of  the  Commission’s  funding  intentions  for  the  remainder  of  the  year,  based  on 

7 

See  NextGenerationEU:  European  Commission  endorses  Sweden's  plan  (europa.eu)  and  Commission 
endorses Poland's €35.4 billion RRF plan (europa.eu). 

6 

 
 
                                                 
current  policy  commitments.  It  signposts  clearly  the  manner  in  which  the  Commission  will 
continue  to  mobilise  funding  for  the  EU’s  economic  and  social  recovery  and  the  climate 
transition on the most advantageous terms possible for the EU and its Member States. 

7