Luxembourg publishes its "Defence Bond Framework" to support strategic defence investments

The Government of the Grand Duchy of Luxembourg has published its Defence Bond Framework, following its formal approval by the Government Council on October 6th, 2025. This marks a significant milestone in Luxembourg's commitment to strengthening national and European defence capabilities in response to evolving geopolitical challenges.

Luxembourg becomes the first European country to issue a national defence bond framework, reinforcing its role as a financial innovator. This initiative follows the country's strategic defence commitments, including its pledge to increase defence spending to 5% of GNI by 2035.

The Defence Bond Framework outlines the principles, eligibility criteria, and governance mechanisms for the issuance of sovereign defence bonds ensuring that proceeds are allocated transparently and responsibly.

Proceeds from the bonds issued under this framework may only be used to finance eligible expenditures. More specifically, this covers investments in key defence and security areas such as infrastructure, aviation and space capabilities as well as industrial innovation.

The Defence Bond Framework also establishes a dedicated "Defence Bond Committee” to oversee project selection, fund allocation, and reporting.

The Luxembourg State Treasury currently plans to issue a first bond under this new framework during the first quarter of 2026.

The full framework is available on the official website of the Luxembourg State Treasury.