From Defense to Housing, Luxembourg Steps Up Retail Bonds Push

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessFrom Defense to Housing, Luxembourg Steps Up Retail Bonds PushLuxembourg’s successful sale of defense bonds has encouraged it to again turn to retail investors, this time with securities that will help fund affordable housing.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.Bob Kieffer, director of the Luxembourg State Treasury Source: Luxembourg Ministry of F(Bloomberg) — Luxembourg’s successful sale of defense bonds has encouraged it to again turn to retail investors, this time with securities that will help fund affordable housing.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe country, one of Europe’s wealthiest, plans to raise €250 million ($286 million) by selling three-year housing bonds to mom-and-pop investors, Bob Kieffer, director of the Luxembourg State Treasury said in an interview. The sale, planned for January, is part of the government’s strategy to engage retail investors, especially for purpose-led bonds. Luxembourg raised €150 million in February through three-year defense bonds, the first European Union nation this century to sell securities earmarked for military spending to the general public. The issue, which paid a 2.25% coupon, sold out within a day, encouraging the government to increase the size of its planned housing bond.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“We’ve seen that there is actually demand from Luxembourg retail investors,” Kieffer said. “It also helps us in developing a new type of investor beyond the institutional investor.”Read: Should the UK Issue War Bonds When It Isn’t at War? ExplainerWith a gold-plated triple-A credit score from all three major ratings agencies and a debt-to-GDP ratio of less than 30% — under half of Germany’s — Luxembourg isn’t turning to households out of funding pressure. Instead, its initiative reflects a worldwide trend of governments courting retail buyers, often using tax incentives, to broaden their investor bases.But Luxembourg’s success with purpose-led retail bonds could also offer a template for more indebted nations that are looking to harness people’s savings for national priorities. In the UK for instance, there has also been talk of ‘war bonds’ as Prime Minister Andy Burnham’s administration looks at ways to fund the depleted military.Purpose-led bonds are particularly suited to the retail space, according to Kieffer, who sees the energy transition as another potential theme for future issuance. “Storytelling is important,” he said “That’s something where you can easily convey the story to the retail investor.”He expects Luxembourg’s retail bond market could eventually grow to as much as €1 billion, out of the total €26.5 billion sovereign debt stock.“We are still in the early stages and there’s still experimentation to be done,” he said. “If this is a success and it catches on, we might come to a situation where we have recurring issuances.”Still, the government is reluctant to grow the retail market much beyond that, given it would compete with bank deposits. “Offering very safe investment products that are perceived like an alternative to savings accounts, that’s what we’re looking at here,” Kieffer said. “We don’t want to take too much out of the banking system.”This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.