MNI: EU Defence Bond Approval To Pave Way For Summer Issuance
MNI (BRUSSELS) - The European Commission is set to formalise its EUR150 billion SAFE programme to provide loans to pay for a boost to defence spending on Wednesday, with member states’ approval likely in April and May, paving the way for bond issuance to begin by as early as the summer, European Union officials told MNI.
Not all the EUR150 billion will necessarily be funded on bond markets, and money under the Security Action For Europe programme will not be pre-allocated to countries, as was the case with the NextGenerationEU post-Covid scheme, but disbursed on a "first come first serve" basis, they said.
"We won't do specific issuance. We can just issue, without saying what it is for. We could even use existing money that has already been borrowed," one official said, referring to the Commission's significant cash holdings. These vary widely but stood at EUR33.8 billion at the start of 2025, down from almost EUR77 billion at the beginning of December, but up from EUR28.2 billion in the first half of 2024.
QUICK DISBURSEMENT
In theory, the liquidity reserve could allow the Commission flexibility to start disbursements to those states which decide to take up loans relatively quickly following approval of the SAFE regulation and the submission of states' applications.
"Once the regulation is approved we can start disbursing, but member states will need to prepare plans, which will then need to be assessed by the Commission," the official added.
MNI understands that there is concern that the demand for SAFE loans may prove underwhelming, given the limited number of countries that have meaningfully higher interest rates than the Commission on their borrowings as well as the non-financial requirements of the loans. (See MNI: France, Other EU States, To Forego Defence Escape Clause)