The Daily Update: NextGenerationEU Bonds / New Concorde

Yesterday saw the launch of the initial 10-year NextGenerationEU bonds, designed to help fund the recovery from the global pandemic. The offering came in at double the size initially expected at EUR20bn and is the start of the EU’s multiyear bond issuance to finance the EUR750bn pandemic recovery fund. The EU has already issued approximately EUR100bn of debt to fund its job support program SURE, injecting the cash whilst the NextGenerationEU recovery fund went through the approval process.

Although the issue was double the size that was initially touted, that did not dampen investor demand. Bids for the deal topped EUR142bn, which in turn allowed the leads to cut the spread offer by 3 bps, to mid swaps -2. At time of writing, it is currently trading at a G spread of about 25 bps over, about 45 bps more than the comparable German debt. The bonds have an AAA credit rating from Moody's.

Before we go, for those of you that are used to getting on a plane and turning left (so before children or until they pay for themselves if you're picking up the tab), United Airlines recently announced it would buy 15 of Boom's supersonic 'Overture' airliners to add to its fleet. Both Richard Branson’s Virgin and Japan airlines have also placed pre-orders for the aircraft.

The plane is slated to roll out in 2025, fly in 2026 and expected to carry passengers by the end of the decade. The Overture will bring back the first supersonic commercial flights since the withdrawal of the much-loved Concorde in 2003. Supersonic commercial flight is banned over land in the U.S, however New York to London in three and a half hours and Tokyo to San Francisco in six hours will be appealing to many high-net-worth individuals and high-end business customers. According to UBS the market for a new supersonic aircraft could be as large as USD160bn by 2040.

Lastly, an interesting fact about Concorde. In its 27 years in service, it flew more than 600,000 hours supersonic, more than all other supersonic aircraft, both military and civilian, in the world combined.