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The government bond “Defence Bond” is now fully subscribed.
A government bond available to the general public from january 15
Defence Bond issued by the State of the Grand Duchy of Luxembourg
The Ministry of Finance has recently announced the launch of the Luxembourg Defence Bond available to the general public.
Fixed interest rate: 2.25% per year
For Luxembourg resident individuals acting within the scope of the investment of their private savings: interest not subject to income tax
Maturity: 3 years
Subscription period: from January 15, 2026 at 14.00, and no later than January 30, 2026 .
Minimum subscription amount: EUR 1,000 (thereafter in multiples of EUR 1,000)
Maximum subscription amount: EUR 150,000 per person, per bank
The allocation of the Luxembourg Defence Bond is based on a “first come, first served” principle. Due to potentially high demand and transaction volumes, the Bank cannot guarantee the successful completion of all bond purchase. The validation of subscription may take a few days; we kindly ask for your patience and understanding.
Full information on this product is available on the government’s website.
How to invest?
1. If you do not have one, request the opening of a portfolio via secured message in BILnet.
2. Check and update easily your investor profile in BILnet.
3. Subscription can be requested via BILnet by sending a secure message.
Understand the fees when investing in this bond
No transaction fees will apply, meaning:
- No BIL commission at subscription
- No external brokerage fees
- No processing fees
Custody and management fees will be charged according to the current pricing schedule
BIL is a distributor of the government bond
BIL is acting as joint lead manager, distributor, and listing agent for this bond issuance. The bank may receive compensation for the distribution of this product aimed at supporting their selection policy in an open architecture of financial instruments offered to their clients. The amount received corresponds to 0.5% of the subscribed amount.
This bond is designed for retail clients and is considered a non-complex financial instrument; therefore, no appropriateness assessment is required.
Fund utilisation overview
The funds raised will be allocated to investment projects according to the criteria established in the Defence Bond Framework. Exclusion criteria are listed in this same document.
An annual report detailing the exact allocation of funds will be published at least once a year on the website of the State Treasury.
Understand a government bond
Main advantages
Government bonds are debt securities issued by a national government to finance itself. When you buy such a bond, you are lending money to the government in exchange for regular interest payments and the return of your principal at maturity.
- Lower Credit Risk as Governments generally have strong creditworthiness, making State bonds less likely to default compared to corporate bonds.
- Predictable Income as fixed interest are paid at regular intervals, offering a stable and predictable source of income.
- Capital Preservation if held to maturity, you typically receive back the full amount invested, which appeals to conservative investors.
- Diversification helps reduce overall portfolio risk and balance exposure by including government bonds alongside other asset classes.
Main risks
Government bonds are generally considered lower-risk investments compared to stocks, but they are not risk-free. Key risks include:
- Interest Rate Risk
Bond prices move inversely to interest rates. If rates rise, the market value of existing bonds typically falls, which can lead to losses if you sell before maturity. - Credit and Sovereign Risk
While rare for highly rated governments, there is still a possibility that a government could delay or fail to meet its debt obligations. - Liquidity Risk
n certain market conditions, selling government bonds quickly may be difficult without accepting a lower price. - Currency Risk
If you invest in bonds issued in another currency than yours, exchange rate fluctuations can impact your returns.
This page is provided for information purposes only, does not constitute any advice (whether investment advice, legal, accounting, tax or other), and is only valid at the time it is given. This information is not intended to replace the knowledge and expertise of their user. This page is not exhaustive and is subject to BIL’s General Terms and Conditions. BIL shall bear no responsibility whatsoever with respect to the present communication or its use by any person, to the largest extent permitted by law. The products and/or services described in this document may not be available in all countries.
