EU bonds are being repriced at higher spreads based on higher risks

The EU bond market has exploded with well over 200 billion euros in just two years. However, there is a problem measuring how they should be priced. These bonds have a triple-A rating but they do not trade like other triple-A issuers. They used to trade with a premium, but not anymore. The markets perceive these bonds as riskier. See "Do financial markets consider European common debt a safe asset?"

These euro bonds have different issuances and guarantees so they are not alike. For example, the European Investment Fund (EIB), the European Stability Mechanism (ESM), and the European Financial Stability Facility (EFSF) have all issued bonds. The last two entities were started to help vulnerable countries during the euro debt crisis. There are also the Support to Mitigate Unemployment Risks in an Emergency (SURE), NextGenerationEU (NGEU), and the Macro Financial Assistance (MFA) bond programs. The market has treated this as close substitutes, but they have now moved to levels higher than even single-A corporates.

Without the ECB buying the bonds, private investors must the funds to buy this debt and they don't seem to like the terms. It could be a liquidity issue. It could be associated with the newness of the issuer, but the supposed safe asset in Europe may not be that safe, and the Euro bond market may be more segmented than believed earlier. Without the ECB being the buyer of first and last resort, the market is radically different and not as well-structured as the US bond markets.