The European Commission headquarters in Brussels.
(Bloomberg) — The European Union expects its bond market to continue to develop with further issuance programs and futures contracts, even though its push to join sovereign debt indexes has failed so far.
Most Read from Bloomberg
The EU, already the fifth largest issuer in European markets with more than €657 billion ($770 billion) of bonds outstanding, was dealt a blow this week when Intercontinental Exchange Inc. decided not to add its notes to sovereign indexes. That followed a string of similar rejections from other providers.
The EU is currently treated as a supranational entity by major index compilers, which officials cite as a key reason why its borrowing costs are higher than those of European governments with similar credit ratings. The bloc’s campaign for sovereign status has included efforts to improve the liquidity of its bonds, and it said ICE’s reasoning was not a negative comment on the solidity of the assets.
“The decision is not motivated by concerns linked to the volumes, structure or liquidity of the EU-Bond programme,” the European Commission said in a reply to a Bloomberg request for comment on the ICE decision. The EU’s bonds are “a deep and resilient market, which continues to develop and grow in the upcoming years.”
While its joint bond sales were used to support Europe’s recovery from the Covid pandemic, the bloc’s executive said new programs such as Security Action for Europe (SAFE) — to fund defense spending — demonstrated the potential for further issuance. It expects outstanding volumes to reach almost €1 trillion by end-2026.
The EU noted the ICE decision reflects that a number of consulted parties did not consider its fiscal autonomy as “sufficiently distinct” from that of its member states to warrant treatment as a sovereign issuer in its own right.
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.