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EU’s bond spree risks chipping away at demand for members’ debt

After a blockbuster start to the year for euro-area bond sales, a barrage of debt from the European Union risks cannibalizing future demand for its member countries. There’s some speculation EU bonds could one day rival German bunds or U.S. Treasuries.

Photo: Sascha Steinach/UDL

The bloc is due to launch its first bonds of the year this week, after its initial social debt sales in 2020 drew record bidding. It will follow that up in 2021 by making a start on 750 billion euros (USD 905 billion) in joint issuance to fund the region’s recovery from the pandemic.

That’s set the stage for a shakeup of fund allocations that could see national debt ditched or shunned to make room, according to investors across the continent including Janus Henderson in London, Grupo Novo Banco in Lisbon and Degroof Petercam in Brussels. There’s some speculation EU bonds could one day rival German bunds or U.S. Treasuries.

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