More than 90% of buyers of Luxembourg defence bonds were residents and the oldest investor was over 90 years old, Finance Minister Gilles Roth told lawmakers on Tuesday, giving a first update on the novel security.
The strong participation of residents was expected, as only Luxembourg residents benefit from the tax exemption attached to the bonds, Roth said.
The defence bonds were issued on 15 January, with individual investments ranging between €1,000 and €150,000 per person and per bank. The bonds carry a fixed interest rate of 2.25% net – equivalent to 2.81% gross – and have a maturity of three years. The interest is paid out annually and is tax free for residents.
Luxembourg defence bond sold out in under a day
The issuance, capped at €150m, was fully subscribed in less than 24 hours.
Roth said the investor base was broad, with many small savers participating. “Some customers invested €2,000 or €3,000. Since one bond costs €1,000, many bought two or three,” he said, adding that the majority of investments were below €100,000. “People of all ages bought the bonds,” Roth said. “The oldest buyer was over 90 years old.”
The finance minister described the rapid sell-out as a sign of public confidence in Luxembourg’s financial stability and public finances.
Asked whether similar bonds could be issued to finance housing or the energy transition, Roth said the government was still analysing the figures but would consider further demand following the success of the defence bond.
“The success of this defence bond is proof for the government that people believe in the stability of the country and its public finances. It also shows that we as Luxembourg – as a small country – are able to launch innovative savings products together with the Chamber.”
“At the same time, we will continue to issue regular bonds on the financial markets, not least to refinance maturing debt,” Roth said.
(This article was originally published by the Luxemburger Wort. Translated using AI, edited by Kabir Agarwal.)
.
