Later this month the government of Luxembourg is planning to issue a digital bond of at least €1 billion, Finance Minister Gilles Roth said. It could potentially reach €3 billion, the Treasury’s cap on issuance for the rest of the year. A conventional bond may follow if there is room, though at the full cap the digital deal alone would overtake Hong Kong, which set the record last week with a digital bond equivalent to $2.55 billion across four currency tranches.
One point emphasized by the Treasury is that there’s no need for investors to engage with distributed ledgers, so they can invest in their usual manner. They will also be able to use it for ECB collateral purposes given the central bank has supported DLT issuances of certain securities since March, provided they are issued via a CSD. It will be the first DLT-native benchmark bond from a European government, although Luxembourg issued a digitally native short-dated treasury certificate last year. Slovenia issued a €30 million digital bond in 2024, but Luxembourg’s would be the first at benchmark scale.
The 10 year digitally native note will use the Clearstream D7 distributed ledger platform operated by LuxCSD and be listed on the Luxembourg Stock Exchange. The banking syndicate comprises Barclays, BGL BNP Paribas, Citi, Crédit Agricole CIB and Spuerkeess with international distribution via ICSDs Clearstream Banking Luxembourg and Euroclear Bank. Spuerkeess is the issuer agent and Settlement Lead Manager and settlement will remain conventional. The Treasury makes no mention of using Project Pontes, the Eurosystem solution that enables on-chain settlement either using a T2 trigger solution or cash tokens.
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