Slovenia launches EU's first digital sovereign bond via BNP Paribas

Slovenia has issued the first digital sovereign bond in the European Union. The bond was issued and placed by BNP Paribas. It had a nominal size of 30 million euros ($32.5 million) with a 3.65% coupon and maturity date of Nov. 25, according to the Slovenian Finance Ministry. 

BNP Paribas used its Neobonds platform for the July 25 bond issue. Neobonds is a distributed ledger technology (DLT) tool that uses Digital Asset’s Daml language on the Canton blockchain. Settlement was carried out on the Banque de France’s DL3S interoperability system.

BNP Paribas has two tokenizing platforms

The bond issue is part of the European Central Bank’s (ECB) wholesale central bank money settlement experimentation program. That program announced the beginning of its second phase in June. Three interoperability solutions are included in the program.

Besides France’s DL3S, Deutsche Bundesbank’s Trigger Solution and Banca d’Italia’s TIPS Hash-link are being trialed. BNP Paribas CIB chief operating officer Philippe Maillard said in a statement:

“This transaction was made possible by leveraging the strength of BNP Paribas' integrated and diversified model across business lines, including Global Markets, ALM Treasury, Securities Services, FIC Official Institutions Coverage and BNP Paribas Asset Management.”

Besides Neobonds, BNP Paribas operates the AssetFoundry, a tokenization platform based on Ethereum. BNP Paribas was one of the original participants in the Canton Network, along with such institutions as Cboe Global Markets, Paxos, Microsoft, Goldman Sachs and Deloitte, when the blockchain debuted in 2023.

More digital bonds issued all the time

Digital bond issues are gradually joining the financial mainstream. The World Bank issued the first bond on a blockchain in 2019. The People’s Bank of China issued a bond onchain later the same year. Hong Kong issued an 800-million Hong Kong dollar (roughly $100 million) tokenized green bond in 2023. The island nation of Palau partnered with Japanese blockchain company Soramitsu on a government bond platform earlier this month.

Austria carried out a simulated digital bond settlement on a secondary market in May during the first part of the ECB experimentation. Italy’s state-owned Cassa Depositi e Prestiti issued a digital bond worth $27.2 million on Polygon using the TIPS Hash-link solution.