TLDR
Italy’s Cassa Depositi e Prestiti (CDP) issued a €25 million digital bond on the Polygon blockchain.
The bond was underwritten by Intesa Sanpaolo as the sole investor.
This issuance is part of the European Central Bank’s wholesale DLT settlement trials.
It’s the first to use Italy’s ‘Fintech decree’ law, which allows for direct securities issuances without central securities depositories.
The transaction was settled in central bank money using the Bank of Italy’s TIPS Hash Link solution.
Italy’s state-owned development bank, Cassa Depositi e Prestiti (CDP), has issued a €25 million digital bond on the Polygon blockchain.
This issuance, underwritten by Intesa Sanpaolo as the sole investor, marks a major step in the adoption of blockchain technology for financial instruments in Europe.
The digital bond issuance is part of the European Central Bank’s (ECB) wholesale DLT settlement trials. These trials aim to test how blockchain technology can be used for the settlement of financial transactions using central bank money.
In this case, the payment was made using the Bank of Italy’s TIPS Hash Link solution, which connects blockchain networks with the TARGET2 system for wholesale payments.
What makes this issuance particularly noteworthy is that it’s the first to use Italy’s new ‘Fintech decree’ law. This law, which is Italy’s implementation of the DLT Pilot Regime, allows for the issuance of digital securities without the need for central securities depositories or bank intermediaries. Under this law, a Digital Register must be maintained by an authorized Digital Register Manager to log the details of securities owners.
CDP, which is majority-owned by Italy’s Ministry of Economy and Finance, acted as both the Market DLT Operator and the authorized Digital Register Manager for this issuance. This dual role demonstrates the flexibility of the new regulatory framework in allowing issuers to manage their own securities directly on the blockchain.
The digital bond has a four-month term and was rated by major credit rating agencies. It offers a fixed coupon of 3.63% on an annual basis. The settlement of the bond was completed on the same day as the issuance, showcasing the efficiency of blockchain-based transactions.
Fabio Massoli, CDP’s Director of Administration, Finance, Control and Sustainability, highlighted the significance of this transaction:
“This represents a significant step for CDP in capital market innovation through the pioneering adoption of blockchain technology for bond issues.”
He added that this new market ecosystem could provide added value to issuers and investors alike, potentially opening up new opportunities for other market participants, including small and medium-sized enterprises.
Intesa Sanpaolo, Italy’s largest bank with over $1 trillion in assets, played a crucial role in this issuance as the underwriter and sole investor.
Massimo Mocio, Deputy Chief and Head of Global Banking & Markets at Intesa Sanpaolo, expressed pride in being the first in Italy to carry out such an operation under the new legal and regulatory framework.
This digital bond issuance is part of a broader trend in the financial industry towards the tokenization of real-world assets. Global banks and asset managers are exploring blockchain technology to achieve operational benefits such as faster and more transparent transaction settlements, lower costs, and greater efficiency.
Niccolò Bardoscia, head of digital assets trading and investments at Intesa Sanpaolo, emphasized the potential of this technology:
“Public blockchains are a powerful technology for financial institutions, making transactions faster and safer. Tokenization is establishing a new standard for efficiency and automation in financial markets, and I believe this technological change will impact not only bonds but every asset class over the coming years.”
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