The Swiss City of Lugano has issued a CHF 120 million ($139m) digital bond, its third. The city now issues its bonds exclusively via the SIX Digital Exchange (SDX). There was sufficiently high demand that the nine year 1% coupon bond was issued above par.
As with its past issuances, it listed the bond on SDX and the main SIX exchange. And the bond can be held in the SDX digital central securities depository (CSD) and the SIS conventional one.
“Lugano has optimized its debt management strategy, obtaining more cost-effective financing than expected that will help support Lugano’s financial strength in the medium and long term,” it said in a statement.
The City was the first non-financial institution to use the SDX when it issued its first CHF 100 million digital bond in 2023. It was the first digital bond that the Swiss National Bank (SNB) incorporated as part of the SNB General Collateral Basket. This may have been a world first for a central bank to allow the use of digital bonds in central bank repurchase agreements (repos).
In February this year, it followed it up with another CHF 100 million issuance. At that time, the novelty was the settlement used the SNB’s wholesale CBDC (wCBDC). The latest bond will also be settled using the wholesale CBDC. We believe it’s the first bond issuance since the SNB announced a two year extension of the wCBDC pilot in June.
The joint lead managers for the issuance were Basler Kantonalbank, Raiffeisen, J. Safra Sarasin and Zürcher Kantonalbank.
