Singapore Exchange and HSBC Come Together on a $300M Blockchain Bond Issuance

A joint venture between the British multinational investment bank HSBC, Singapore Exchange (SGX), and state-owned investment company Temasek has completed its first digital bond issuance of $300 million worth of corporate bonds on SGX’s digital asset platform by employing blockchain technology.

$300M Of Corporate Bonds Replicated Digitally With DLT

The collaboration between the three entities, which began in 2019, has provided the first successful usage of SGX’s digital asset issuance, depository, and servicing platform. According to a report from today, the trio replicated S$400 million (nearly $300 million) worth of 5.5-year public bonds from the large rice, cotton, and coffee bean supplier – Olam International.

This marks a significant milestone for SGX’s digital asset platform, which utilized DAML – the smart contract language powered by Digital Asset. It employed the distributed ledger technology (DLT) to capture the rights and obligations of parties involved in the asset issuance and servicing.

Yuval Rooz, co-founder and CEO of Digital Asset, noted that the bond market is “one of the last bastions of risk, holding on to paper and manual processes.” However, SGX’s DAML smart contract solution solves “a major pain point market participants have been working to fix for years.”

The three organizations pointed out several vital efficiencies and merits from the digital platform. Those include a timely ISIN (identifier) generation, eliminating settlement risks for issuers, arrangers, and investors, and reducing primary issuance settlement from five to two days.

The digitalization process of the bond also employed HSBC’s on-chain payments solution. The giant bank describes it as a feature that allows for “seamless settlement in multiple currencies to facilitate the transfer of proceeds between the issuer, arranger, and investor custodian.”

The First Of Many?

SGX representatives acknowledged the success and asserted that it will continue working with issuers, arrangers, custodian banks, and investors to digitalize bond issuance and depository and asset servicing.

“We’re proud to be working closely with SGX and Temasek to drive faster, more transparent, and fully secure settlements for bond issuers and investors. This first digital bond issuance for Olam International shows how our on-chain solution can fulfill payment needs in DLT-based ecosystems and demonstrates our desire to shape and participate in the next generation of asset networks, to better service our securities services clients.” – commented David Koh, an executive at HSBC Singapore.