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EIB issues its first ever digital bond in pound sterling

The European Investment Bank (EIB) has priced its first ever £50 million digital bond using a combination of private and public blockchains operated and accessed via HSBC's tokenisation platform, Orion.

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EIB issues its first ever digital bond in pound sterling

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The transaction follows the recently adopted Luxembourg legal framework tailored to allow for the issuance, transfer and custody of dematerialised securities on distributed ledger technology (DLT) infrastructure.

The encrypted private blockchain serves as the record of legal ownership of the digital bonds and provides an operational framework to manage the floating rate instrument and its lifecycle events. The public blockchain is used for information purposes and provides increased transparency to investors and the market as to holdings of the digital bonds on an anonymised basis.

The dematerialised digital bonds will be held in digital securities accounts kept on HSBC Orion. The BNP Paribas Securities Services business in Luxembourg, RBC and HSBC will act as custodians for existing clients who invest in this digital bond.

The architecture — distributed between BNP Paribas, HSBC and RBC Capital Markets — sees HSBC acting as central account keeper recording transactions in the digital bonds.

EIB vice president Ricardo Mourinho Felix says: “The time has come for further innovation in the financial sector, and we are pleased to issue the first digital bond in pound sterling on a private and public blockchain with the support of our counterparts. This new financial tool will provide additional capital flow that the EIB will invest in projects with global impact.”

The EIB last year issued a €100 million two-year bond using public blockchain technology in tandem with Goldman Sachs, Santander and Societe Generale.

Benjamin de Forton, debt capital markets sovereign, supranational & agencies, Emea, BNP Paribas comments: “After the successful euro-denominated trades, the EIB is now launching the world’s first ever digital bond denominated in pound sterling. This bond is testing the potential of tokenisation on a private ledger for safety and efficiency combined with disclosure on a public ledger for transparency.”

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