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A&O advises on EIB’s inaugural digital bond settling in tokenised representation of euro central bank money

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Mausen Frank
Frank Mausen

Partner

Luxembourg

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Image of Salvador Ruiz Bachs
Salvador Ruiz Bachs

Partner

Madrid

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Scharnke Martin
Martin Scharnke

Partner

Frankfurt am Main

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Behrens Alexander
Dr Alexander Behrens

Partner

Frankfurt am Main

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Schmitt Daniela
Dr Daniela Schmitt

Counsel

Frankfurt am Main

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Image of Philippe Noeltner
Philippe Noeltner

Senior Associate

Luxembourg

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Alina Golovkova

Senior Public Relations, Marketing and Communications Specialist

Luxembourg

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29 November 2022

Allen & Overy advised a bank consortium on European Investment Bank’s issue of a Luxembourg law-governed dematerialised bond in different blockchains across Europe through legal and operational engineering. The consortium consists of Goldman Sachs Bank Europe SE, Santander Corporate and Investment Banking (SCIB) and Societe Generale.

This transaction involved lawyers from Allen & Overy’s Luxembourg, Germany, Spain, US and France offices, with a cross-border team led in Luxembourg and Madrid by capital markets partners Frank Mausen and Salvador Ruiz Bachs, with support from senior associate Philippe Noeltner.

The bond is in smart-contract format and has a built-in automated coupon feature. This transaction involves two central banks providing a tokenised representation of euro central bank money. It is the first digital bond to be fully subscribed on-chain and settling on T+0 basis through 2 interoperable permissioned blockchains. This digital bond will be listed on the Luxembourg stock exchange’s securities official list.

Partner Frank Mausen commented on this transaction “Luxembourg is in the process of putting in place a comprehensive ecosystem for DLT transactions. The transaction at hand perfectly illustrates the recognition by leading international institutions of the robustness of the Luxembourg legal DLT framework. It is another example of the increased use of DLT in capital markets deals. The transaction puts Luxembourg on the map of preferred jurisdictions in which DLT players can structure their transactions. It has been a great honour to be a part of an international team involving lawyers from Luxembourg, Germany, Spain and the US who advised on the deal.”

Partner Salvador Ruiz Bachs said “The cross-border Allen & Overy DLT team has been able to leverage past successes to help the Joint Lead Managers to navigate the complex and multifaceted angles of re-inventing how capital markets transactions can be done using DLT. “

Senior associate Philippe Noeltner commented “This is the first high-profile DLT bond issuance relying on the innovative and flexible Luxembourg legal framework and certainly not the last. Digital capital markets and DLT laws are rapidly changing across Europe and it was important to have a cross-border blockchain team in place for this transaction to make sure different pieces of national and European legal frameworks were being leveraged upon.”

This latest transaction builds on our previous work advising EIB on its first blockchain bond in 2021, where Allen & Overy advised the same bank consortium on European Investment Bank’s issue of a digital bond on Ethereum public blockchain.

The EIB was advised by Clifford Chance.