(April 8): The European Union (EU) has attracted over €89 billion (RM436.63 billion) of investor bids for a reopening of two of its existing securities in a sign of resilience of Europe’s primary market against the volatility stemming from US tariffs.

The dual-tranche deal includes a €5 billion tap of the EU’s 2.625% July 2028 bond set to price at 14 basis points over mid-swaps at final terms. The borrower upsized a tap of its 2.5% October 2052 bond by €1 billion to €3 billion after demand exceeded €49 billion, more than the €40 billion seen on the shorter tranche. It is set to price at at 126 basis points (bps) over mid-swaps, according to a person familiar with the matter. 

The 2028 tap is set to be sold with a new issue premium of about 2.07 bps and the 2052 is offering an additional 2.38 bps, according to Bloomberg calculations using pricing source CBBT.

In a further sign of strength of Europe’s primary market, the German State of Lower Saxony is also selling a €500 million no-grow 10-year benchmark bond sale, with over €1.5 billion of investor orders so far, according to another person familiar. That deal is being offered at 44 basis points over mid-swaps at final terms. 

Activity in Europe which also saw a sale from Triple BBB rated German residential landlord Vonovia last Friday contrasts with that of the US where no new US investment-grade bonds have been issued since Wednesday morning. Still, activity has so far been dominated by safer names, and a handful of companies that concluded investor meetings in recent days have yet to emerge. 

BNP Paribas, Deutsche Bank, JPMorgan, Natixis, and Nomura are arranging the EU that is expected to price later on Tuesday.

The transaction lands at a moment of renewed market tension after the US’s imposition of fresh tariffs on trading partners around the world last week. Credit default swap indices — used as gauges of credit risk — widened to the highest since late 2023 on Monday, but were showing tentative signs of recovery on Tuesday morning.

Uploaded by Tham Yek Lee