Although the European Commission has long been able to issue bonds, it has been a rather rare guest on the capital market. In 2020, everything changed.
During crises, it is important to steer financial flows in the right direction. Public capital alone is not enough. The financial market has a special role to play in mobilising private capital in the fight against Covid-19 and its consequences.
The capital market’s response was not long in coming. Many supranational issuers successfully issued bonds to support countries, industries and populations hard hit by Covid-19. These bonds proved themselves suitable instruments in the fight against the economic impact of the pandemic.
And so it was that bonds came into focus as part of the European Union’s fourth financial aid programme – the Support to mitigate Unemployment Risks in an Emergency programme – and made the Commission one of the largest social bond issuers overnight.
However, that was only the…