The European Investment Bank (EIB) has launched it’s first Sterling digital bonds – registered on a private blockchain and mirrored on an anonymised public blockchain. This follows similar digital bonds from the EIB in Euros in 2021 and 2022.

The EIB has used Luxembourg’s recently adopted legal framework that allows for the issuance, transfer and custody of dematerialised securities on distributed ledger technology (DLT).

This issue, together with the prior euro-denominated issues act as proofs of concept for the market. The EIB likened this issue to their issuance of the first green bond 15 years ago.

This issue is £50m, 2 years maturity and pays SONIA + 12bps. It is governed by Luxembourg law.

The blockchain used is HSBC’s Orion platform.

Blockchain-based bonds have the potential to reduce costs for the issuer and investors, and to increase transparency in the still over-the-counter bond market – potentially improving secondary market liquidity.

This proof of concept work by the EIB throws up potential opportunities for investment banks who want to own their own private blockchain, and issuers who want to raise their profile and help grow the debt capital markets ecosystem.