- City of Lugano and SIX have recently issued digital bonds on the SIX Digital Exchange (SDX).
- Lugano’s newest bond is a seven-year, $113 million issuance with a 0.6125% coupon, settled using a wholesale central bank digital currency (wCBDC).
- SIX issued a fully digital $283 million bond with a 1.00% coupon, also listed on the main Swiss Exchange.
- Bonds can be traded by institutions without blockchain integration, thanks to a link between the SDX and the main securities depository.
- Officials say these digital bonds promote efficiency, transparency, and easier access to markets.
The City of Lugano and SIX have both issued digital bonds on the SIX Digital Exchange (SDX) in recent days. These bonds use a wholesale central bank digital currency (wCBDC) for settlement, aiming to modernize how financial assets are issued and traded in Switzerland.
This marks Lugano’s fourth digital bond. The city issued a seven-year bond with a face value of $113 million and a 0.6125% coupon. Settlement uses the wCBDC, and the bond is registered on the SDX central securities depository. The bond is listed on the main SIX Swiss Exchange, allowing institutional investors to trade it alongside traditional bonds.
According to Paulo Bortolon, Deputy CFO for Lugano, “With these issuances, we are not only innovating public debt management, but giving a real push to a financial revolution that will bring greater efficiency, transparency, and accessibility to markets. Lugano wants to be an active part of this change.”
This month’s activity comes after a quiet period in the digital bond market, despite an extension of the wCBDC pilot in June 2024. Last year saw a surge in digital bond offerings, but recently only Lugano’s third digital bond in November broke the lull.
SIX has also issued its latest digital bond. The company’s previous bond issuance in November 2021 launched SDX and was split between digital and conventional formats. The new $283 million bond is fully digital, carries a 1.00% coupon, and has drawn strong interest from investors. It is similarly listed on the main Swiss Exchange.
Joint lead managers for the Lugano bond included UBS, Vontobel, and Raiffeisen. For the SIX bond, Raiffeisen, UBS, and Zürcher Kantonalbank served as lead managers. SDX’s linkage of its depository with the main SIS depository means investors do not have to use blockchain systems directly, simplifying trading.
The SDX platform, which supports the Project Helvetia III wCBDC pilot, aims to bring more efficiency and transparency to financial markets. Digital assets and tokenization continue to gain ground, as regulators and issuers test new ways to handle conventional financial instruments using digital technology.
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