European Investment Bank issues its first ever digital bond on a public blockchain

29 aprilie 2021

The European Investment Bank (EIB) has issued a €100 million two-year bond using Ethereum public blockchain technology.

On 27 April 2021, the EIB launched a digital bond issuance on a blockchain platform, deploying this distributed ledger technology for the registration and settlement of digital bonds, in collaboration with Goldman Sachs, Santander and Societe Generale.

In a partnership with Banque de France, the payment of the issue monies from the underwriters to the EIB has been represented on the blockchain in the form of CBDC.

The EIB believes that the digitalisation of capital markets may bring benefits to market participants in the coming years, including a reduction of intermediaries and fixed costs, better market transparency through an increased capacity to see trading flows and identity asset owners, as well as a much faster settlement speed.

Comments on the Issue:

Vice President Mourinho Félix, European Investment Bank (EIB): “As a global leader in the green and sustainability bond markets, the EIB is clearly well‑placed to lead the way now in the issuance of digital bonds on blockchain. These digital bonds will play a role in giving the Bank a quicker and more streamlined access to alternative sources of finance to boost finance for projects across the globe.”

Bertrand de Mazières, Director General Finance at the EIB: “In another testimony of EIB’s leading position in capital markets’ innovation, this transaction marks the EIB’s first step as a pioneer in the use of blockchain technology for the issuance of financial securities. By helping to create a framework for a new market ecosystem, the EIB believes this will bring value added for both issuers and investors, while contributing to an innovative, efficient and secure market infrastructure.”

Christoph Hock, Head of Multi-Asset Trading, Union Investment: We expect the use of blockchain in combination with tokenization to become a game changer for the industry. We have been working on this innovative technology for several years and see a chance that it will be established as a market standard in the future. The close internal teamwork and the cooperation with DZ Bank as a depositary, the EIB and the joint lead managers were key for us to realize this deal in a very short period of time.”

Frédéric Oudéa, Chief Executive Officer at Societe Generale: This pioneer bond issuance on a public blockchain settled with a central bank digital currency involved Societe Generale – FORGE, three international banks and two major institutions: the EIB and Banque de France. It demonstrates the appeal of Distributed Ledger Technology-based projects in the developing EU digital capital markets. This is a new milestone for Societe Generale – FORGE which completes Societe Generale recognized expertise in Capital Markets with a full Digital Asset offer.”

Blockchain is a digital and distributed ledger of transactions using advanced cryptographic technics and the contribution of a network of participants to jointly validate the said transactions by blocks in an ordered and immutable sequence (hence the name ‘Blockchain’). This combination of features primarily aims at providing enhanced security and operational efficiency.

This transaction consists in the issuance by the EIB of a series of bond tokens on a blockchain, where investors purchase and pay for the security tokens using traditional fiat. The Joint Lead Managers will then settle the underwriting against the issuer using a representation of central money, the Central Bank Digital Currency (CBDC). The principal is expected to be repaid in commercial fiat at maturity. The transaction will use Ethereum, a public blockchain protocol.

Summary Terms and Conditions for the new bond issue

Issue AmountEUR 100m
Pricing Date27 April 2021
Settlement Date28 April 2021
Maturity Date28 April 2023
Coupon0.000%, annual
Re-offer Yield-0.601%
Re-offer Price101.213%
Governing LawFrench law
Joint Lead ManagersGoldman Sachs, Santander, Societe Generale
Registrar, Fiscal Agent, Settlement Agent and Platform ManagerSociete Generale – FORGE
AdviserLinklaters LLP
BlockchainEthereum public blockchain

Background information:

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investments in order to contribute towards EU policy goals. As of 28th April 2021 and including this transaction, the EIB has raised EUR 33.4bn this year, around 56% of its announced EUR 60bn programme.

Societe Generale – FORGE, a fully integrated subsidiary of Societe Generale Group licensed as an investment firm under MiFID regulation, has built an open, secure and institutional-grade framework for Security Token operations, underpinned by full banking level safety and regulatory compliance. Societe Generale – FORGE provided the issuer, the lead managers and the investors its end-to-end services to issue and manage the digital-native security tokens registered on the blockchain.

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Nic Balaceanu – CEO & fondator Lendrise Marketplace

„40% dintre romani nu au un cont bancar. Sa nu uitam ca din cei 4,5 mil. de romani la Biroul de Credit numai jumatate sunt eligibili pentru un credit bancar. Ceilalti isi pot lua un credit non-bancar sau nu-si pot lua absolut niciun credit.” 

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Sondaj

In 23 septembrie 2019, BNR a anuntat infiintarea unui Fintech Innovation Hub pentru a sustine inovatia in domeniul serviciilor financiare si de plata. In acest sens, care credeti ca ar trebui sa fie urmatorul pas al bancii centrale?