Arbitraging the rating differential between the European Union and the EU country average

The credit rating of the European Union and its federal issuers (EIB, ESM, etc.) is significantly better than the average rating of the EU countries. This probably results from the fact that : The volume of issuance by the EU and its federal issuers remains low; The EU as a whole is fiscally solvent, which is not the case of all EU countries; The EU and its federal issuers are guaranteed by the highest-rated countries. There is a case to “arbitrage” the rating differential between the EU, the EIB and the ESM on the one hand and the EU country average on the other. Indeed, issuance by these federal entities would : Expand the EU’s federal debt and therefore increase the euro’s international reserve currency role, with the associated privileges; Enable EU countries to finance larger amounts of investment at lower interest rates .