This is not a new market, but a new point of entry. LuxSE brings together under one umbrella the debt securities of ten of Europe’s highest-rated public issuers, along with their prices, yields and the documents needed to compare them. The European Safe Asset Gateway, or Esag, was launched on 1 October at the Luxembourg Stock Exchange, in the presence of the European commissioner for the budget, Piotr Serafin, and the Luxembourg minister for finance, 
The selection comprises more than 370 euro-denominated bonds, representing approximately €3,600bn still outstanding. Four supranational issuers are included: the European Union, the European Investment Bank, the European Stability Mechanism and the European Financial Stability Facility. Five countries are included – Germany, Denmark, Luxembourg, the Netherlands and Sweden – as well as the German state-owned bank KfW.
To be included in this segment, a bond must be issued by a sovereign or supranational entity or a public agency based in the European Union, have an AAA rating, be denominated in euros and represent an issue of at least one billion euros. Its initial maturity must also be at least 12 months. LuxSE plans to gradually add other public institutions that meet these criteria.
Spuerkeess and Raiffeisen set to offer products
However, Esag does not allow private individuals to purchase its bonds directly on the stock exchange. It constitutes a specialised section within LuxXPrime, the bond platform launched by LuxSE in 2019. Investors must go through a bank or broker connected to this infrastructure. LuxXPrime currently offers more than 3,000 tradable instruments, including over 1,400 sovereign, sub-sovereign or public-sector bonds. Liquidity providers publish bid and ask prices on the platform for transactions of a size suitable for retail investors.
Spuerkeess and Raiffeisen Bank have announced their support for the initiative and have committed to implementing solutions to make it easier for their retail customers to access the range of products on offer. The press release does not specify the timetable, the minimum investment amounts or the fees that will apply. These three factors will determine the actual scope of the announced opening up of the market.
Another benefit of the platform is the ability to compare bonds. For each bond, investors can view the indicative or valuation price, the yield, the bond’s characteristics and the issuer’s documentation. The selection also includes sustainable bonds, accompanied by their issuance frameworks and, where available, data on their impact.
“Our aim is to give European retail investors more opportunities to put their savings to work and invest in high-quality financial instruments,” explains the CEO of LuxSE, 
Safety does not rule out risk
However, the word ‘safe’ does not mean ‘risk-free’. Even when issued by AAA-rated institutions, these bonds may lose value if they are sold before maturity, particularly if interest rates rise. Their yield also depends on the price paid, whilst the issuer’s credit rating may change. LuxSE itself emphasises that the inclusion of a security in the Esag does not constitute either an investment recommendation or a guarantee of capital. The initiative represents a Luxembourg adaptation of the Savings and Investment Union promoted by Brussels. The European Commission estimates that around €10,000bn lie idle in European households’ bank deposits and is seeking to channel some of this into the capital markets.
“The European Safe Asset Gateway will act as a lighthouse guiding ships to the safest ports in Europe,” says Piotr Serafin. However, this image masks a key distinction: whilst ESAG immediately improves the visibility of European government bonds, their accessibility still depends on banks and brokers choosing to link this platform to their clients’ accounts.
