Bond investors cautiously cheered a proposal by the European Union to issue centrally backed bonds for the first time, a move that attempts to address financial divisions that have long plagued the eurozone.

The European Commission, the bloc’s executive, on 27 May proposed borrowing €750bn ($821.6bn) from capital markets to offer grants and loans to the most beleaguered nations following the coronavirus pandemic. The new program — which isn’t sure to secure the approval of all 27 EU members — could see the introduction of a common European bond, backed by all the states.