OUR solvency her debt EUROPEAN UNION. blow when doubts grow along with interest rates. While government revenue bonds are being strengthened in all 27 EU countries, those of the total debt issued by the EU. higher than analogues France it would be logical for them to move in parallel. To bridge this gap, the investor mentality needs to change, and the EU also needs to implement some of its promises to boost revenues.

The cost of EU borrowing is expected to increase by several tens of billions of euros compared to what we originally expected. This is partly an inevitable consequence of rising interest rates.

Yesterday, the yield of two-year EU bonds fell. they varied at 3.02%, when the corresponding yield on French bonds was only 2.79%, and the Spanish yield was 2.94%. As for the yield on five-year EU bonds, yesterday it reached 2.87%, while the yield on five-year French bonds was 2.63%. And all this when two of the three largest rating agencies, Fitch and Moody’s, repaid the debt to the EU. the highest rating is AAA, and the third chamber of the S&P assigned it AA-. All of these credit ratings are higher than France’s debt equivalent, which is rated Aa2 by Moody’s, AA- by Fitch and AA by S&P.

The yield on conventional debt issued by EE is higher than that of French bonds.

The reason the EU has to pay higher yields on loans is that the markets do not view Brussels as a sovereign debt issuer. The EU’s debt is seen as the debt of a supranational institution, not the debt of a sovereign country.

As such, it is not included in government bond indices. However, if it were included in these indices, then fund managers would probably prefer to sell French bonds and buy EU bonds, thus profiting from the difference between the yields of two different bonds with the same credit rating.

But now you can’t European Commission can’t solve the problem. According to some market participants, such as Moritz Cramer, an economist at LBBW, the Eurozone has not convinced the market that it has the political will to stay together. Its critics always refer to the temporary nature of the lending program during the pandemic, as well as the debt crisis of 2010-2015, which almost broke Eurozone.