Minister of Finance Gilles Roth and Minister of Defence Yuriko Backes officially launched the defence bonds at 2pm at a press briefing, confirming the interest rate will be fixed at 2.25%.
The three-year bond is designed to help fund national defence and security initiatives, with the interest earned being tax-exempt for residents.
Minimum investment is €1,000, up to a maximum of €150,000, in tranches of a thousand euros at a time. Every 12 months, investors will receive a coupon for the interest earned. After three years, the investment will be paid back in full.
People interested in investing in national defence and security projects can apply for the defence bonds at five Luxembourg banks: Spuerkeess, BGL BNP Paribas, BIL, Banque de Luxembourg and Raiffeisen. There are no subscription fees.
The defence bonds profit from Luxembourg’s Triple A rating and are listed on the Grand Duchy’s stock exchange.
The majority of EU member states have agreed to raise their defence spending due to the Russian threat and the US questioning its support for Ukraine and Europe as a whole under the Trump administration.
Luxembourg has promised to increase its defence spending by 5% of Gross National Income by 2035, pushing the target up from 2%. This year the state budget has set aside €1.3 billion for defence, an increase of €500 million compared to last year.
Read more about the government’s Defence Bonds project here.
