EIB launches first sterling-denominated digital bond

EIB HQ in Luxembourg

The European Investment Bank (EIB) announced it has launched its first sterling-denominated digital bond on a private blockchain, in partnership with BNP Paribas, HSBC and RBC Capital Markets.

The £50 million, floating-rate bond was registered in a private blockchain while a public blockchain mirror record would provide increased transparency on an anonymised basis, the EIB said.

The sale followed previous sales by the EIB of euro-denominated digital bonds.

“Today, the European Investment Bank (EIB) priced its first ever £50 million digital bond using a combination of private and public blockchains operated and accessed via HSBC Orion – the bank’s tokenisation platform,” said the EIB.

“It 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 pioneering vision of digital bonds intends to bring benefits to market participants by reducing costs, improving efficiency and allowing for real-time data synchronisation across participants.

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