Client news

ESM issues first digitally native notes with settlement via ECB's Pontes

ESM issues first digitally native notes with settlement via ECB's Pontes
Published Date
Nov 2, 2026
Related people
Image of Martin Scharnke
Martin ScharnkePartner, Frankfurt
Image of Frank Mausen
Frank MausenPartner, Luxembourg
Image of Philippe Noeltner
Philippe NoeltnerCounsel, Luxembourg
image of Alexander Behrens
Dr. Alexander BehrensPartner, Frankfurt
Image of Joachim Wuermeling
Prof Dr Joachim WuermelingOf Counsel, Frankfurt
Image of Faria Fagirzai
Faria FagirzaiSenior Associate, Frankfurt
Image of Eugène Welter
Eugène WelterSenior Associate, Luxembourg
A&O Shearman has advised the four joint lead managers on the ESM’s inaugural issuance of digitally native notes and in relation to a related supplement to the ESM Programme to permit the issuance of digitally native notes on the Clearstream D7 DLT Platform. 

The four banks involved in the inaugural issuance as joint lead managers were DZ BANK, HSBC, Santander and another bank, with DZ BANK and another bank also acting as digital advisory banks. The Bundesbank supports the issuance as the issuing and paying agent.

The EUR1 billion digitally native notes carry a coupon of 3.375% and will mature in April 2030. They are issued on the D7 DLT Platform, as operated by Clearstream Europe AG. The issuance is the first international bond transaction to settle via Pontes, the Eurosystem’s new DLT-based solution for the settlement of wholesale DLT transactions in tokenised central bank money. The digitally native notes are also set to be ECB-collateral eligible and available for international distribution. 

“...a significant step towards a digital capital markets union.”

Martin Scharnke, the lead partner on this transaction, said: “We are proud to have been able to assist on this landmark transaction for the ESM and the European capital markets. The issuance demonstrates how DLT native bonds can be issued under German law and settled using the European Central Bank’s new Pontes platform for DLT-based wholesale transactions in Europe—a significant step towards a digital capital markets union.”

Frank Mausen, partner, and Philippe Noeltner, counsel leading the transaction on the Luxembourg aspects of this issuance, commented: “This is European capital markets integration in action: a European supranational issuer, a German digital market infrastructure and issuance mechanics, Luxembourg-law bond terms, ECB, and Bundesbank-enabled cross-border settlement means and a Luxembourg Stock Exchange listing coming together in a landmark EUR1bn transaction. It demonstrates that Europe has the legal frameworks, market infrastructure and technological capabilities to develop digital capital markets at genuine institutional scale.”

The A&O Shearman team working across the firm’s Frankfurt and Luxembourg offices was led by partner Martin Scharnke (Global Financial Markets, Frankfurt) and counsel Philippe Noeltner (Global Financial Markets, Luxembourg), and further comprised partners Frank Mausen (Global Financial Markets, Luxembourg) and Dr. Alexander Behrens, of counsel Prof. Dr. Joachim Wuermeling (both Financial Services Regulatory, Frankfurt), senior associates Faria Fagirzai (Global Financial Markets, Frankfurt), Eugène Welter (Global Financial Markets, Luxembourg), associates Maria-Therese Bless (Financial Services Regulatory), Dr. Benjamin Wolter, and senior business lawyer Corinna Dreyer (both Global Financial Markets, all Frankfurt).

Related capabilities