Diversified funding strategy
Article 7
1. In implementing the diversified funding strategy, the Commission shall apply the following principles, as appropriate, in full respect of the principle of sound financial management, in order to to borrow the required funding to meet in due time the needs of the relevant programmes for repayable and non-repayable support, and to manage the resulting debt as efficiently and expeditiously as possible, while seeking to obtain the most advantageous financial conditions under the prevailing market conditions for the Union budget and beneficiary countries, and aiming at regular capital market presence: (a) borrowing operations and debt management operations may be conducted on the primary market, on the secondary market and on money markets; (b) borrowing operations shall be organised through a set of individual borrowings of different maturities, ranging from short-term to long-term funding; (c) borrowing operations may be organised through a mix of syndicated transactions and auctions, and private placements, in both cases relying on the services of credit institutions and investment firms who are members of the primary dealer network established under Commission Decision (EU, Euratom) 2021/625 ( 15 ) ; (d) the resulting debt may be rolled-over for the sake of maturity management; (e) cash flow mismatches and liquidity risk shall be managed through measures of debt management operations and liquidity management; (f) interest rate risk and other financial risks may be managed through debt management operations as described in paragraph 2. 2. Where required to ensure a better management of interest rate and other financial risks arising in the execution of the diversified funding strategy, the Commission may use debt management operations that may consist of using derivatives such as swaps to manage interest rate or other financial risks. For this purpose, the Commission may buy back and hold its own bonds. In particular, swaps may only be used for the hedging of interest rate risks borne by countries benefitting from loans. The costs for managing risks with derivatives shall be borne by the beneficiary of the risk management operation.