Eurobonds: The financial weapon at the service of the sovereignty of the European BITD
The debate on the financing of the French Defence Industrial and Technological Base (BITD) is now taking on a new dimension. Between rising geopolitical tensions, the risk of armed conflict with Russia, the need for a ramp-up, industrial relocation and increased dependence on critical technologies, the central question is no longer just “how to finance defense?” ”, but “how to finance a complete sector in a sovereign and sustainable way? ”
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“How to finance a complete sector in a sovereign and sustainable way? ”
As an Air Force Reserve Officer, former Director of Strategy for Corporate and Investment Banking at BNP Paribas and former Product Manager at Clearstream, one of the two major central depositaries of international securities, I wanted to share with you my perspective on this opportunity that has not yet been implemented.
Among these tools, Eurobond is probably one of the most powerful, the least understood and the best suited to financing BITD.
The Eurobond (Eurobond): an international, neutral and extremely flexible instrument
Contrary to what its name suggests, Eurobond is not reserved for Europe. It is an obligation:
- issued outside the jurisdiction of the currency used,
- denominated in EUR, USD, GBP, GBP, CHF or JPY,
- distributed via an international syndicate of banks,
- deposited in international infrastructures (Clearstream and Euroclear),
- purchased by investors from all over the world.
It is a deep, liquid market that is not very politicized and normalized.
For companies, and even more so for those in the defence sector, this opens up very powerful perspectives.
Why are Eurobonds relevant for BITD?
1. Because BITD has massive financing needs
Strengthening the production of ammunition, reindustrializing propulsion, creating alternative chains to Russian titanium or Asian components: all this requires billions, and not just subsidies.
Eurobonds allow:
- To rise €500 million to €2 billion in a single transaction,
- to do it quickly,
- with long maturities (7—20 years),
- without depending solely on the State or on French banks.
It is, in terms of volume, the most powerful tool available.
2. Because their political neutrality is a strategic asset
A “defense” domestic bond issue can quickly become a political, media and ideological subject.
The Eurobond, on the contrary:
- is part of a standardized global market,
- attracts investors used to the defense sector,
- minimizes media exposure and the risk of ideological boycotts.
We are thus financing an industrial sector, not a “military operation”.
3. Because they make it possible to finance several businesses via the same vehicle
The Eurobond market allows for very advanced structures:
- multi-company SPV (Special Purpose Vehicle),
- emissions linked to a sector (e.g. ammunition, drones, electronics),
- co-guarantees between manufacturers.
This logic is perfectly compatible with the needs of BITD, where weaknesses are often located in the supply chain (rank 2/rank 3), and not among the project managers.
A Eurobond BITD France 2030 sector could thus finance 5 to 20 strategic companies, some of which are too small to otherwise access the market, while sharing risks for the benefit of the entire sector.
4. Because the European debt market is deep, diversified and mature
As a former product manager at Clearstream, I saw that American funds, Nordic insurers, Canadian pension funds, Middle Eastern sovereign wealth funds, and European asset managers have a real appetite for high-quality bonds, including defence bonds.
Contrary to popular belief, defense is not excluded from portfolios: it is simply better accepted when it is structured as global industrial financing and is a resilient, non-cyclical sector for long-term investors.
5. Because Eurobonds can be multi-currency (EUR + USD)
BITD buys American components, software in the Middle East or Asian raw materials.
To be able to finance a ramp-up in EUR but also in USD:
- reduces currency risk,
- makes it possible to directly finance critical purchases,
- attracts investors specialized in American defense.
It is an obvious strategic advantage.
6. Because it is a tool that is perfectly compatible with the logics of sovereignty
Eurobond does not mean the relinquishment of financial sovereignty. On the contrary, it reinforces it, because it allows:
- to diversify funders,
- to limit dependence on French or European banks only,
- to avoid the sometimes restrictive conditions of banking markets.
This diversification is healthy: a critical sector should never depend on a single funder.
And why haven't Eurobonds been massively used for defense yet?
There are three main reasons for this inaction:
- Because the BITD is distributed between large groups and critical SMEs (but we have seen that the Eurobond sector via an SPV can remedy this.)
- Because the tool is poorly known to public decision-makers. International debt is often perceived as complex, but it is not.
- Because no one has yet proposed a coherent supply chain diagram. A clear architecture is needed: an orchestrator (e.g. DGA + Bpifrance + an arranger), a selection of companies, transparent governance and an appropriate use of funds.
This is precisely what this type of instrument can do.
It is time for France (and Europe) to take over Eurobonds
We are living in a period where industrial sovereignty is a necessity, where financial needs are exploding and where supply chains need to be rebuilt.
In this context, Eurobond is a powerful instrument, capable of rapidly and massively financing critical defence value chains.
As a reserve officer and former Clearstream officer, I am convinced that France — and Europe — have every interest in seriously considering this path.
No, not to get into more debt. But to strengthen resilience, accelerate sovereignty and give our manufacturers the means to act.
Because sovereignty is never free. But its absence always costs a lot more.