Eurex’s New EU Bond Futures: A Strategic Move to Solidify the EU’s Debt Market

The European Union’s growing role as a collective borrower has reached a pivotal juncture with Eurex’s upcoming launch of futures contracts on EU bonds. Set to begin trading on September 10, 2025, the Euro-EU Bond Futures (FBEU) aims to address liquidity gaps and provide hedging tools for investors, as the EU plans to issue up to €150 billion in defense-focused debt by 2026. This move underscores Eurex’s ambition to position EU debt on par with sovereign bonds like Germany’s Bund or France’s OAT, even as structural hurdles loom large.

The Product: A Blueprint for Liquidity and Risk Management

The FBEU contracts will mirror Eurex’s existing fixed-income derivatives, featuring a 6% coupon and accepting deliverable bonds maturing between 8 to 12 years. With a notional value of €100,000 per contract, the futures are designed to align with the EU’s issuance profile, which has surged to over €700 billion since 2020 to fund post-pandemic recovery. The contracts’ specifications aim to simplify trading and reduce fragmentation in the EU bond market, which has historically lagged behind national markets in liquidity and investor participation.

Strategic Imperative: EU’s Debt Autonomy and Defense Spending

The EU’s shift toward joint borrowing is driven by member states’ fiscal constraints, particularly in defense. With national budgets strained, the bloc plans to issue up to €150 billion in bonds to fund defense modernization—a move that requires robust derivatives markets to attract institutional investors. Eurex’s futures provide a critical tool for hedging exposure, enabling investors to manage interest rate risks as the EU’s debt issuance scales.

However, a key obstacle persists: EU bonds remain excluded from major government bond indexes, such as those by Bloomberg and MSCI. This exclusion limits their status as “government-equivalent” securities, deterring passive investors who rely on index inclusion. While Eurex’s deliverable contracts offer an advantage over ICE’s EU bond index futures—launched in December 2024—index providers’ reluctance to include EU debt highlights lingering doubts about its long-term viability as a sovereign-like instrument.

Market Implications: A Step Toward Institutionalization

The launch reflects a broader EU strategy to cement its borrowing capacity beyond 2026. By standardizing futures contracts, Eurex aims to attract global investors, particularly pension funds and sovereign wealth managers, who require liquid derivatives to justify large allocations.

Yet challenges remain. The lack of index inclusion means EU debt may struggle to attract passive inflows, and the bloc’s fiscal framework—still evolving—adds uncertainty. For instance, divergent economic policies among member states could heighten default risks, even as the EU’s collective creditworthiness is stronger than individual nations’.

Conclusion: A Necessary Risk for Financial Autonomy

Eurex’s FBEU launch is a bold step toward institutionalizing the EU’s debt market. By providing hedging tools and aligning with established benchmarks, the contracts could catalyze liquidity growth, benefiting issuers and investors alike. However, the EU’s success hinges on overcoming structural barriers: persuading index providers to recognize its bonds as sovereign-equivalent and demonstrating fiscal discipline to maintain investor confidence.

With €150 billion in defense debt on the horizon and post-pandemic recovery bonds still outstanding, the stakes are high. If Eurex’s initiative sparks broader market adoption, the EU could solidify its position as a major borrower, reducing reliance on national treasuries and enhancing its financial sovereignty. The September 10 launch date marks not just a product launch, but a test of the EU’s ambition to become a pillar of global capital markets.

As Eurex’s head of products, Matthias Graulich, noted: “This is about more than trading—it’s about building the infrastructure for a new era of European fiscal unity.” The next year will reveal whether investors agree.