In this investment case, we focus our attention on the EU Defense sector. The EU is launching a historic €800bn rearmament initiative through the ReArm Europe Plan, supported by €650bn in fiscal space and €150bn in EIB loans, marking a long-term pivot toward military autonomy and modernization. European defense companies are set to benefit from local procurement preferences, while US firms may access niche opportunities. The sector’s outperformance is driven by government-backed contracts and improving earnings visibility. Defense spending is now a structural investment theme, with long-term procurement commitments supporting both equity and credit markets, tightening spreads for investment-grade issuers and creating fixed income opportunities.
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