Brussels (The Brussels Morning Newspaper) – Europan Commission projects EU Repurchase Agreement, thereby becoming a sovereign-style issuer on EU capital markets.
The European Commission launched its EU Repurchase Agreement (Repo) facility, an arrangement of short-term issuance of EU securities available on-demand to EU primary dealers, to further support the role of EU bonds and, consequently, enhance the overall efficiency and fluidity of the EU bonds market.
Following EU bonds’ exponential increase in secondary market trading in recent years, the launch of the Repo facility will also make the Commission evolve into a sovereign-style issuer on EU capital markets.
What benefits does the EU repo agreement offer?
Through the facility, the EU presents its primary dealers with the possibility to source specific EU bonds temporarily, keeping their capacity to post firm public quotes. The facility permits investors to be more confident in the terms on which they can trade EU bonds in the secondary market. The first EU repo transactions will be conducted through the Eurex Repo web-based trading system and will be cleared via Eurex Clearing.
Repo facilities are generally used by sovereign issuers to back the market activity of their primary dealers. The EU Repo facility works in line with the standard practices of peer sovereign issuers. The takeoff of the Repo facility marks the enactment of the final measure announced by the Commission in December 2022 to back the EU bonds market. The Commission has now all the instruments that it needs to manage successfully a busy period of issuance to the end of 2026 with the approval of its valued Primary Dealer Network.
To observe the launch of the Facility, Commissioner for Budget and Administration, Johannes Hahn, together with the President of the Deutsche Bundesbank, Joachim Nagel, will conduct a ‘Ring the Bell Ceremony’ at 17:00 CEST on the trading floor of the Frankfurt Stock Exchange, in Germany.
