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Grand Duchy of Luxembourg places 10 year EUR2bn bond issue

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The Grand Duchy of Luxembourg returned to the EUR government bond capital markets on 2 July with a new EUR2bn institutional benchmark transaction, maturing on 10 July 2023 and paying a coupon of 2.125 per cent.

 
With this transaction, the Grand Duchy establishes a new liquid point in the 10 year maturity, paying its lowest coupon ever. This issue is the first time the Grand Duchy of Luxembourg has made a second outing in the capital markets in the same year. 
 
Investor perception towards the Grand Duchy has improved due to the very low budget deficit and an improving economy. Joint bookrunners on this transaction were BCEE, BGL BNP Paribas, BIL, Deutsche Bank and HSBC.
 
The new 10 year will be the second government bond to be issued through LuxCSD, which is the new securities settlement system in Luxembourg and is approved by the European Central Bank for use in Eurosystem credit operations. LuxCSD is jointly owned by Banque centrale du Luxembourg (BCL) and Clearstream International and committed in May 2012 to join TARGET2-Securities.
 
The Grand Duchy of Luxembourg mandated the syndicate to conduct investor meetings in Frankfurt and London on the 10 and 17 June respectively, with a view of issuing a benchmark offering, subject to market conditions.  Following a favourable response from investors and a period of relative stability in global markets, the joint leads decided to proceed with a transaction on 2 July. This was done to capitalise on the increased investor demand for top-rated EUR credits, following the rates backup in June.
 
Investor response was brisk as soon as the mandate announcement hit the screens. Strong momentum, supported by an IOI book in excess of EUR1bn within less than one hour, led the books to be officially opened at price guidance of Mid Swaps + 18 to 20 bps just before 10am CET.  

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