Yesterday the Luxembourg State Treasury issued €50 million in digital Treasury notes using the HSBC Orion DLT platform. The notes which will be listed on the Luxembourg stock exchange, carry zero coupon and were sold at a discount of 99.03% of face value, but will be redeemable at par in six months.
It’s the second European state to issue using DLT, following Slovenia’s €30 million bond in July last year. One of the biggest benefits is faster issuance and efficiencies which can potentially reduce costs, but it also provides greater transparency.
The key innovation is that the note is digitally native and only exists on the blockchain. Understanding the terminology helps clarify what makes this approach distinctive. A ‘digital’ bond usually means it is native, whereas a ‘tokenized’ bond often refers to a digital twin of an existing bond.
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