EU Bond Reopening Attracts Massive Investor Demand Despite US Tariff Tensions

The European Union successfully tapped into investor appetite with a reopening of two of its existing bonds, attracting over €89 billion in bids despite market volatility stemming from recent US tariff impositions, Bloomberg reports.

The robust demand signals the resilience of Europe’s primary market, even amidst global economic uncertainty.

The dual-tranche deal included a €5 billion increase to the EU’s 2.625% July 2028 bond, priced at 14 basis points over mid-swaps at final terms. The reopening of its 2.5% October 2052 bond was even more successful, with the borrower upsizing the tap by €1 billion to €3 billion after demand surged past €49 billion, exceeding the €40 billion seen on the shorter-dated tranche. This longer-term bond is set to price at 126 basis points over mid-swaps, according to a source familiar with the matter.

Bloomberg calculations using pricing source CBBT indicate the 2028 tap is being sold with a new issue premium of approximately 2.07 basis points, while the 2052 bond is offering an additional 2.38 basis points.

Further demonstrating the strength of the European market, the German State of Lower Saxony is also issuing a €500 million no-grow 10-year benchmark bond, which has already attracted over €1.5 billion in investor orders, according to sources. That deal is being offered at 44 basis points over mid-swaps at final terms.

This activity in Europe, which also saw a bond sale from German residential landlord Vonovia last Friday, contrasts with the US market, where no new investment-grade bonds have been issued since Wednesday morning. However, European activity has been largely concentrated on safer issuers, and some companies that have recently held investor meetings have yet to tap the market.

The EU bond transaction, arranged by BNP Paribas, Deutsche Bank, JPMorgan, Natixis, and Nomura, comes at a time of renewed market tension following the US imposition of fresh tariffs on trading partners last week. Credit default swap indexes, which serve as gauges of credit risk, widened to their highest levels since late 2023 on Monday, but showed tentative signs of recovery on Tuesday morning.