Conditions for loans under the SURE (II) instrument

Subject: Conditions for loans under the SURE (II) instrument

In its answer to written question E-004874/2020 on ‘Conditions for loans to be granted to Portugal and other Member States under the SURE instrument’, the Commission states that ‘after assessing Portugal’s application and having verified the fulfilment of the conditions set out in Article 3 of [the] SURE Regulation, [it] has proposed to make available to Portugal a loan amounting to maximum EUR 5 934 462 488 and with a maximum average maturity of 15 years’.

However, contrary to what was expressly requested in the question, in its reply the Commission does not provide any information on the interest to be charged on this loan.

I therefore repeat my request to the Commission to provide me with full and detailed information concerning the terms of this loan, in particular the interest charged on it, its rate and the estimated amount.

Furthermore, it is not clear from the Commission’s answer whether or not the conditions of the loans are identical for the 17 Member States which have requested them to date, in particular with regard to the interest rate envisaged and the repayment period. That is why I would like further clarification in this regard.

Answer given by Mr Hahn on behalf of the European Commission

(8 March 2021)

Under the SURE Regulation (1), the Council has agreed to make available to Portugal a loan amounting to a maximum of EUR 5 934 462 488, having a maximum average maturity of 15 years, in a maximum of eight instalments that may be disbursed in one or several tranches (2).

To make available this loan, the Commission, on behalf of the EU, uses its high credit rating standing to borrow on the capital markets or with financial institutions by issuing social bonds so as to optimise the cost of funding (3). It transfers the amounts borrowed to the Member States requesting financial assistance under SURE on the same advantageous conditions, with a marginal adjustment to cover the costs and expenses incurred by the Commission when borrowing.

The loan agreement between the EU and Portugal does not predefine all the financial elements of the loan as they depend on the conditions of the borrowing transactions by the Commission, which themselves depend entirely on the market conditions applicable on the day where the bonds are issued. Therefore, elements such as the interest (rate and amount) can only be determined on the day where the bonds are issued.

Portugal has received a first loan instalment of EUR 3 billion through the third SURE social bond issued by the EU in November 2020, with a maturity of 15 years. This bond was priced at a negative yield of ‐0.102%, which means that for every EUR 102 that Portugal received, only EUR 100 will have to be paid back to the Commission. This negative interest rate advantage was transferred to Portugal by the Commission in the same way as for other beneficiary Member States benefiting from the third SURE social bond.

⋅1∙ European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) following the COVID-19 outbreak: https://eur-

lex.europa.eu/legal-content/EN/TXT/?uri=celex:32020R0672

⋅2∙ Council Implementing Decision (EU) 2020/1354 of 25.9.2020 granting temporary support to the Portuguese Republic to mitigate unemployment risks in the

emergency following the COVID-19 outbreak: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020D1354&qid=1611311136357 ⋅3∙ Details of the borrowing operations under SURE are published on the Commission’s website on a transaction by transaction basis. The press release for each

transaction informs about the exact pricing conditions (e.g. https://ec.europa.eu/info/sites/info/files/about_the_european_commission/eu_budget/sure_3_15year_press_release_final.pdf). Consolidated reporting on the amounts disbursed to Member States by maturity is available under: https://ec.europa.eu/info/sites/info/files/about_the_european_commission/eu_budget/sure_disbursements_tables_30.11.pdf