A&O Shearman Advised Joint Lead Managers On U.S. Supranational Bond Issuance Under Luxembourg Law

A&O Shearman advised joint lead managers on U.S. supranational bond issuance under Luxembourg law

A&O Shearman in Luxembourg has advised the joint lead managers and HSBC Orion on the U.S.-based Inter-American Development Bank’s (IADB) issuance of digital bonds. This issuance was governed by Luxembourg law and facilitated by the DLT tokenisation platform HSBC Orion. The notes were issued on March 18, 2025.

This transaction aligns with the growing trend of issuing digital bonds and marks the second supranational digital bond issuance by Multilateral development bank (MDB) IADB. MDBs promote economic and social development in developing countries and are also significant players in international capital markets, where they raise substantial funds to finance their loans.

The digital bonds were issued and documented using HSBC Orion, HSBC's digital asset platform. HSBC Orion has a track record of facilitating significant bond issuances, such as the European Investment Bank's inaugural bond under the Eurosystem's exploration of new technologies for wholesale central bank money settlement in November 2024. In Luxembourg, HSBC Orion is constructed to align with the two-tier account structure mandated by the Luxembourg DLT regime, with HSBC serving as the central account keeper and custodian.

The joint lead banks involved are HSBC Bank plc (United Kingdom) and Natwest Markets plc (United Kingdom).

This transaction was led from Luxembourg by A&O Shearman partner Frank Mausen and counsel Philippe Noeltner, with support from juriste Roman Mazhorov.

Frank Mausen, partner in the global financial market practice at A&O Shearman, comments: "We are proud to have advised on this landmark transaction which sets a precedent for future supranational bond issuances under Luxembourg law. This achievement underscores the confidence of MDBs in advancing global economic development through innovative financial instruments and highlights Luxembourg's strong legal framework in supporting such instruments on an international level."

Philippe Noeltner, Counsel in the global financial markets practice adds: "Moreover, this transaction reflects the trust of MDBs in the transformative power of DLT technology to improve transparency, efficiency, and security in the financial markets. Europe has been at the forefront of establishing a clear regulatory framework for digital bonds, and we are confident that this leadership will continue to drive market development."