BONDS: EU Spreads Unreactive To FT Story Pointing To Rollover Of Maturing Debt

EU spreads a little tighter vs. Bunds, matching moves in OATs.

• No tangible reaction to an FT story suggesting that “EU officials are examining ways to roll over hundreds of billions of euros of Covid-era bonds in order to avoid the bloc’s common budget being overwhelmed by repayment costs.”
• Such a move has already been backed by Mario Draghi but is set to face opposition from some of the fiscally hawkish nations.
• Also note that economist Daniel Gros told previously told our policy team that “recommendations for centralised European funding for public infrastructure and the green transition are likely to be ignored by member states facing a surge in populist support.” https://marketnews.com/mni-interview-draghi-eu-funds-call-to-prompt-pushback
• Looking ahead, Rabobank write “clearly there is a very long way to go before an agreement on this could be reached. However, if the EU (as a sizeable issuer) was to become a permanent feature of the fixed income landscape then this would aid its transition from SSA to govvie and we would expect EU bonds perform versus France.”