The Singapore Exchange (SGX), with HSBC Singapore and Temasek, has completed its first digital bond issuance.
The bonds were issued by agri-food giant Olam International on SGX's digital asset issuance, depository and servicing platform.
The SGX said it has replicated a $400 million 51/2-year public bond issue and a follow-on $100 million tap of the same issue by Olam.
It uses smart contracts to capture the rights and obligations of parties involved in issuance and asset servicing, such as arrangers, depository agents, legal counsel and custodians, the bourse added.
Olam managing director and chief financial officer N. Muthukumar said: "Going digital will make the entire process more efficient and transparent for all parties - issuers like us receive our funds more speedily, investors get their bonds more quickly, while the arrangers, custodian and banks benefit from the reduced probability of error and speed."
The digital bond used HSBC's on-chain payments solution, which allows for seamless settlement in multiple currencies to facilitate transfer of proceeds between the issuer, arranger and investor custodian.
Some key efficiencies observed within the pilot include elimination of settlement risk, reduced time for primary issuance settlement from five to two days as well as the automation of coupon and redemption payments and registrar functionality.
The SGX said: "An Asia first for a syndicated public corporate bond, this digital bond marks another milestone in SGX's use of digital asset technology, by streamlining processes for issuers, underwriters, investors and ecosystem participants across primary issuance and asset servicing."
It added that it will work with issuers, arrangers, banks and investors to digitalise bond issuance, depository and asset servicing.
Mr Lee Beng Hong, SGX's senior managing director and head of fixed income, currencies and commodities, said: "Debt capital markets globally are characterised by deeply engrained legacy systems and processes which can be made faster, more accurate and efficient with this new technology.
MORE EFFICIENT AND TRANSPARENT
Going digital will make the entire process more efficient and transparent for all parties - issuers like us receive our funds more speedily, investors get their bonds more quickly, while the arrangers, custodian and banks benefit from the reduced probability of error and speed.
OLAM MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER N. MUTHUKUMAR, on the digital bond issuance by the agri-food giant.
THE BUSINESS TIMES