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International pioneer in debt Capital Markets

Over the past few decades, the Luxembourg financial centre has developed a comprehensive range of services to meet the growing demands of debt capital markets and connect international investors and borrowers.

Luxembourg is home to Europe’s leading stock exchange for the listing of international bonds. In 2019, approximately EUR 1.18tn of debt was issued in the country through a range of different instruments. These include corporate bonds, high-yield bonds, Eurobonds, indexed bonds, green bonds, sukuk and dim sum bonds.

HIGH-YIELD BONDS

The Luxembourg Stock Exchange is one of the most popular places for listing high-yield bonds. Luxembourg vehicles are regularly used because of Luxembourg’s attractive corporate law and the legal certainty and robustness offered by Luxembourg financial collateral arrangements.

High-yield bonds are issued by operators for financing, refinancing and are also commonly seen in the context of acquisition financing transactions in combination with more traditional bank funding.

Luxembourg’s collateral laws are efficient and robust, which is of particular importance in complex, multi-tier financing structures where high-yield bonds are used.

Philippe Prussen
Partner, Elvinger Hoss Prussen

Listing

The Luxembourg Stock Exchange is the leading European exchange for the listing of high-yield bonds. It became the first exchange in Europe to offer a regulated market listing high-yield bonds in 2006, publishing the first EU guidance and rules for high-yield bond listing in cooperation with European High Yield Association in 2006.

Numerous multinational groups have chosen Luxembourg as their issuing and listing location for high-yield bonds.

SUSTAINABLE BONDS

Sustainable bonds are expected to become a dominant source or funding and make up a larger share of the $100 trillion global debt market.

LGX is the first exchange to translate industry best practices for sustainable securities into mandatory requirements. Its entry requirements are in line with industry standards for sustainable securities and recognise several broad categories of eligibility for sustainability projects.

There is no doubt that new issuance of green securities has taken off since COP21 and there now seems to be a real desire for change. The green market has enormous potential but this needs to be matched by interest from investors. By setting strict standards for ‘green’ securities, LGX aims to create an environment that will allow the market to prosper in a secure and transparent way.

Robert Scharfe,
CEO, LuxSE

GREEN BONDS

Green Bonds are debt instruments that have been issued to fund projects that have positive environmental or climate impact.

In 2007, the Luxembourg Stock Exchange was the first stock exchange in the world to list a Green Bond, it was issued by the Luxembourg-based European Investment Bank. In 2016, it launched the Luxembourg Green Exchange (LGX), the first platform dedicated exclusively to green and sustainable securities. It provides issuers and investors an environment where they can come together and fulfill their sustainability objectives. LGX now displays over 830 sustainable securities, valued at over USD 375 billion.

EUROPE’S PREMIER DIM SUM BONDS LISTING VENUE

Dim sum bonds, which are also known as offshore renminbi (RMB) bonds or CNH bonds, are fixed income instruments denominated in offshore RMB that trade and settle outside of mainland China. The dim sum bond market is attractive to both issuers and investors as it helps diversify their sources of funding and portfolio of investments.

LuxSE ranks first globally in terms of number of dim sum bond listings. Today, many established international companies issue dim sum bonds as part of their global funding programmes, diversifying their base of investors. Many of these institutions already list debt securities in other currencies on LuxSE and continue to use its quick and efficient processes for RMB denominated listings.

The first RMB denominated fixed income security to be listed in Europe was issued by Volkswagen in May 2011; it was listed on LuxSE. Since then, business volumes have grown substantially. Today, more than 180 dim sum bonds have been listed in Luxembourg raising a total amount of CNY 60.3 bn.

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