Exclusive: Luxembourg Treasury Director: €150mln Retail Defense Bond Planned for 1Q26

9 October 2025

By Marta Vilar – MADRID (Econostream) – Luxembourg will launch a retail defense bond in the first quarter of 2026 with an issuance size of about €150 million, according to Bob Kieffer, Director of the Luxembourg Treasury.

In an interview with Econostream on 1 October 2025, (transcript here), Kieffer said the Treasury was “currently considering an issuance size of €150 million,” with the offer aimed at Luxembourg retail investors.

“[W]e are really in an experimentation phase where we have to see what the market appetite for this type of product will be,” he said. “We will adjust the product for later years based on the experiences of this first issuance.”

Alongside the retail defense bond, which is expected to be launched in the first quarter of next year, Luxembourg expects to sell another sovereign bond for institutional buyers in the first half of 2026, Kieffer noted.

He said the country’s issuance calendar was gradually becoming more structured due to refinancing needs and the projected deficit, though it remained opportunistic.

“Our issuance calendar is becoming more regular than it was previously, but it’s still largely opportunistic,” he said. “So, we organize our issuances based on the maturities of our bonds that are coming to maturity, of course with a certain flexibility.”

With a forecast deficit of roughly €1.5 billion in 2026, Luxembourg could issue a benchmark bond of “at least €1 billion,” he said.

The recent €2.5 billion 10-year benchmark was “a very successful transaction,” Kieffer said, adding that the increase from the originally planned €2 billion would “also impact our potential calendar for 2026, because we now have more liquidity for longer.”

Asked about buybacks, switches or other liability management operations, Kieffer said the Treasury had studied them but concluded they offered little benefit for Luxembourg.

On innovation, Kieffer described the June digital Treasury note as “experimental,” and suggested another distributed ledger technology (DLT) issuance could be delivered “within a year or so.”

Regarding sustainable finance, Kieffer said no new sustainability bond was planned in the short term and confirmed that the existing line would not be reopened.

Although retail investors have not traditionally been a Treasury target, Kieffer said that if the new defense bond proved successful, it could become an annually recurring product.

Regarding Luxembourg’s investor base, Kieffer said that it was “very heavy in European investors,” but that efforts were underway to diversify.

“[W]e have increased conversations with potential investors from Asia or from the Middle East,” he said. “It's not an absolute priority, but is certainly something we are looking at.”