Luxembourg’s finance ministry on Wednesday said the treasury had issued a €2.5bn bond  Photo: Matic Zorman / Maison Moderne

Luxembourg’s finance ministry on Wednesday said the treasury had issued a €2.5bn bond  Photo: Matic Zorman / Maison Moderne

The Luxembourg state treasury on Wednesday placed a €2.5bn bond issue to boost liquidity, with demand exceeding the offer.

Luxembourg already in March this year and April last year raised a total of €5bn on the capital markets to help pay for its pandemic rescue package.

The government recently signed a €830m agreement with employer groups and trade unions to combat the energy crisis, including a mix of state subsidies, tax credits and loan guarantees.

The treasury said it issued the €2.5bn bond to “expand its liquidity cushion in the context of the deterioration of the macroeconomic situation and the measures foreseen in the tripartite agreement of 31 March 2022.”

Public debt will rise to €19.5bn or 25.2% of GDP, below a 30% threshold foreseen in the government’s coalition agreement and below a 60% EU goal.

The bond is divided into two tranches of €1.25bn each. The first will reach maturity in seven years at a coupon rate of 1.375%. The second will reach maturity in 20 years at a coupon rate of 1.75%.

The Spuerkeess, BIL, BGL BNP Paribas, Barclays and Société Générale were the joint lead managers of the government bond, which will be listed on the Luxembourg Stock Exchange.