- Lugano Issues CHF 120 Million Digital Bond Via SIX Digital Exchange, Marking Third Such Offering, Exceeds Par Value.
- Bonds Dual-Listed on SDX and SIX, Can Be Held in Both Digital and Conventional Central Securities Depositories.
In Lugano, Switzerland, the issuance of a digital bond worth CHF 120 million ($139 million) through the SIX Digital Exchange (SDX) represents a notable advancement in digital finance. This marks the third such issuance by the city, emphasizing a shift towards exclusively using digital platforms for such financial activities.
The bond, featuring a nine-year term and a 1% coupon, attracted substantial interest, leading to its issuance above par value.
The City of Lugano has consistently utilized SDX for its bond issues, which are also listed on the primary SIX exchange. This dual listing allows the bonds to be held both in the digital central securities depository (CSD) at SDX and the traditional SIS CSD.
Such integration showcases the city’s innovative approach to debt management, aimed at achieving cost-effective financing solutions that bolster its financial stability over the medium to long term.
Lugano was a pioneer in adopting digital bond issuance when it launched its first CHF 100 million bond on SDX in 2023. This bond was significant not only for being the inaugural digital bond issued by a non-financial entity but also for being the first digital bond included in the Swiss National Bank’s (SNB) General Collateral Basket—a move possibly unprecedented globally regarding central bank acceptance of digital bonds for repurchase agreements (repos).
In a subsequent issuance in February of the current year, Lugano raised another CHF 100 million. This time, the settlement utilized the SNB’s wholesale Central Bank Digital Currency (wCBDC), marking another step forward in the integration of digital currencies within traditional banking frameworks.
The latest bond follows this innovative path, with its settlement also involving the wCBDC. This occurs shortly after the SNB’s decision to extend the wCBDC pilot by two years, announced in June.
The issuance was managed by a consortium of banks including Basler Kantonalbank, Raiffeisen, J. Safra Sarasin, and Zürcher Kantonalbank, highlighting the collaborative efforts within the Swiss banking sector to advance digital finance.
