Italy’s Cassa Depositi e Prestiti issues €25M digital bond on Polygon blockchain, underwritten by Intesa Sanpaolo.
Cassa Depositi e Prestiti (CDP), Italy’s state-owned development bank, has issued a €25 million digital bond on the Polygon blockchain.
This issuance, which is the sole investor and is underwritten by Intesa Sanpaolo, represents a significant advancement in integrating blockchain technology into financial instruments in Europe.
Digital bonds are issued as part of the European Central Bank’s (ECB) wholesale DLT settlement trials. These trials aim to evaluate the potential of blockchain technology to facilitate the settlement of financial transactions using central bank money.
The payment was processed through the Bank of Italy’s TIPS Hash Link solution, designed to facilitate wholesale payments by connecting blockchain networks to the TARGET2 system.
This issuance is particularly noteworthy because it is the first to implement Italy’s new “Fintech decree” law.
This law, which is Italy’s implementation of the DLT Pilot Regime, enables the issuance of digital securities without the necessity of central securities depositories or bank intermediaries.
The details of securities proprietors must be recorded in a Digital Register, which an authorized Digital Register Manager must maintain by this law.
The CDP, which is majority-owned by Italy’s Ministry of Economy and Finance, served as both the Market DLT Operator and the authorized Digital Register Manager for this issuing.
This dual function illustrates the adaptability of the new regulatory framework by enabling issuers to directly manage their own securities on the blockchain.
Prominent credit rating agencies rated the digital bond and has a four-month term. It provides an annual coupon of 3.63%.
The efficacy of blockchain-based transactions was demonstrated by the fact that the bond settlement was finalized on the same day as the issuance.
Fabio Massoli, the Director of Administration, Finance, Control, and Sustainability at CDP, noted the importance 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 further stated that this new market ecosystem has the potential to create new opportunities for other market participants, including small and medium-sized enterprises, by providing added value to both issuers and investors.
Intesa Sanpaolo, Italy’s largest bank with over $1 trillion in assets, was instrumental in this issuance as the sole investor and underwriter.
Massimo Mocio, Deputy Chief and Head of Global Banking & Markets at Intesa Sanpaolo, is proud to have been the first organization in Italy to execute this operation under the new legal and regulatory framework.
The tokenization of real-world assets is a broader trend in the financial industry, and this digital bond issuance is a component of it.
To realize operational advantages, including increased efficiency, reduced costs, and faster and more transparent transaction settlements, global institutions and asset managers are investigating blockchain technology.
The potential of this technology was underscored by Niccolò Bardoscia, the director of digital assets trading and investments at Intesa Sanpaolo:
“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.”
