Key Takeaways
- • The European Investment Bank priced a EUR 100m, two-year digital bond on 27 April 2021 and settled it on 28 April 2021, described as the market's first multi-dealer led primary issuance of digitally native tokens on a public blockchain.
- • The bond, issued on Ethereum, carries a 0.000% annual coupon, a re-offer price of 101.213% and a re-offer yield of -0.601%, maturing 28 April 2023 under French law.
- • Goldman Sachs, Santander and Societe Generale acted as joint lead managers, with Societe Generale - FORGE serving as registrar, fiscal agent, settlement agent and platform manager.
- • Banque de France was involved as part of its Central Bank Digital Currency (CBDC) program, with the underwriters' payment of issue monies to the EIB represented on-chain as CBDC.
- • The EIB says the model could reduce intermediaries and fixed costs, improve market transparency and speed settlement, and that the transaction brings its 2021 funding raised to EUR 33.4bn, about 56% of its EUR 60bn programme.
Summary
On 27 April 2021, the European Investment Bank (EIB) launched a digital bond issuance on a public blockchain, using distributed ledger technology for the registration and settlement of the bonds. The EUR 100m two-year transaction was placed with key market investors and was presented by the EIB as the market's first multi-dealer led primary issuance of digitally native tokens on a public blockchain. The issue settled on 28 April 2021 and matures on 28 April 2023, with a 0.000% annual coupon, a re-offer price of 101.213% and a re-offer yield of -0.601%. The principal is expected to be repaid in commercial fiat at maturity.
Goldman Sachs, Santander and Societe Generale acted as joint lead managers. Societe Generale - FORGE, a fully integrated subsidiary of Societe Generale licensed as an investment firm under MiFID, served as registrar, fiscal agent, settlement agent and platform manager. Investors paid for the security tokens in traditional fiat, while the underwriters settled against the EIB using a representation of central money in the form of a CBDC, in a partnership with Banque de France. The transaction uses the Ethereum public blockchain. Linklaters advised the EIB and Allen & Overy advised the joint lead managers. Union Investment also participated as an investor, with DZ Bank acting as depositary.
The EIB said digitalisation of capital markets may reduce intermediaries and fixed costs, improve transparency by making trading flows and asset owner identities more visible, and speed settlement. Vice President Mourinho Felix described the digital bonds as a way to give the Bank quicker and more streamlined access to alternative sources of finance. Director General Finance Bertrand de Mazieres called the transaction the EIB's first step as a pioneer in using blockchain for issuing financial securities. Societe Generale CEO Frederic Oudea said the deal demonstrated the appeal of DLT-based projects in developing EU digital capital markets. Goldman Sachs International CEO Richard Gnodde said it confirmed the EIB's position as a market pioneer.
As of 28 April 2021, including this transaction, the EIB had raised EUR 33.4bn in 2021, around 56% of its announced EUR 60bn programme.
Goldman Sachs, Santander and Societe Generale acted as joint lead managers. Societe Generale - FORGE, a fully integrated subsidiary of Societe Generale licensed as an investment firm under MiFID, served as registrar, fiscal agent, settlement agent and platform manager. Investors paid for the security tokens in traditional fiat, while the underwriters settled against the EIB using a representation of central money in the form of a CBDC, in a partnership with Banque de France. The transaction uses the Ethereum public blockchain. Linklaters advised the EIB and Allen & Overy advised the joint lead managers. Union Investment also participated as an investor, with DZ Bank acting as depositary.
The EIB said digitalisation of capital markets may reduce intermediaries and fixed costs, improve transparency by making trading flows and asset owner identities more visible, and speed settlement. Vice President Mourinho Felix described the digital bonds as a way to give the Bank quicker and more streamlined access to alternative sources of finance. Director General Finance Bertrand de Mazieres called the transaction the EIB's first step as a pioneer in using blockchain for issuing financial securities. Societe Generale CEO Frederic Oudea said the deal demonstrated the appeal of DLT-based projects in developing EU digital capital markets. Goldman Sachs International CEO Richard Gnodde said it confirmed the EIB's position as a market pioneer.
As of 28 April 2021, including this transaction, the EIB had raised EUR 33.4bn in 2021, around 56% of its announced EUR 60bn programme.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.