First Blockchain digital bond in Italy pursuant to Fintech Decree, with A&O Shearman advising

Cassa Depositi e Prestiti S.p.A. (CDP) successfully concluded its first issue of a “Digital Bond” on Blockchain, in a transaction fully underwritten by Intesa Sanpaolo as sole institutional investor. The bond, with a nominal value of EUR25 million, has a duration of four months and a fixed coupon at maturity of 3.633%, calculated on an annual basis. A&O Shearman advised Intesa Sanpaolo on the transaction.

The issue, which took place via distributed ledger technology (DLT), is the first to be made in Italy pursuant to the “FinTech” decree-law, which governs the issue and circulation of certain financial instruments in digital form. The transaction took place within the context of the participation of CDP and Intesa Sanpaolo in the trial launched by the European Central Bank (ECB) to identify new solutions for central bank money settlement of wholesale transactions for transactions carried out on DLT. CDP's project was in fact selected by the Bank of Italy and the ECB as part of the "Exploratory work on new technologies for wholesale central bank money settlement” initiative.

Emiliano La Sala, counsel, commented: "We are at the forefront of a pivotal moment in the Italian financial market, thanks to the Fintech Decree enabling this groundbreaking transaction through the adoption of Distributed Ledger Technology and blockchain for bond issues. We are proud to have been alongside Intesa Sanpaolo in this deal, our role is a testament to our expertise in navigating uncharted legal territories.  This transaction applies smart contracts and identifies new solutions for central bank money settlement for operations carried out on DLT, marking a significant step forward as it paves the way for the development of a robust digital bond market in Italy.”

Within this initiative, CDP and Intesa Sanpaolo acted as Market Participants. CDP also acted as Market DLT Operator and as DLT Register Manager (i.e.Responsabile del Registro) following CONSOB's approval of its inclusion on the list of Register Managers for digital circulation.

Cash flow settlement took place on the same day in central bank money using the “TIPS Hash Link” solution developed by the Bank of Italy, which allows interoperability between a generic DLT platform and the Target Services (specifically T2) system used by the Eurosystem for wholesale payments.

The A&O Shearman team alongside Intesa Sanpaolo was led by counsel Emiliano La Sala, Head of domestic debt capital market e fintech group coordinator, with support from partner Cristiano Tommasi, assisted by associate Giulia Ghiandai and trainee Francesco Laurenti. Partner Francesco Guelfi advised on tax-related matters.