The Singapore Exchange (SGX) has completed its first digital bond issuance via its digital asset issuance, depository and servicing platform, with the help of HSBC Singapore and Temasek.
According to a statement from SGX, the digital bond issued by the exchange replicated a $400 million 5.5-year public bond issue and a follow-on $100 million tap of the same issue by Olam International.
This digital syndicate public corporate bond was a first for Asia and another milestone for the exchange, which has embraced digital asset technology. The end result was made possible following SGX streamlining processes for issuers, underwriters, investors and ecosystem participants across primary issuance and asset servicing, the company said.
SGX uses HSBC’s on-chain payments solution
The digital bond issued by SGX used HSBC’s on-chain payments solution. This product facilitates settlement in multiple currencies to enable the transfer of proceeds between the issuer, arranger and investor custodian.
Commenting on the achievement, Lee Beng Hong, Senior Managing Director, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said in the statement: “We are very excited that this collaboration with HSBC and Temasek has led to the successful completion of the first digital syndicated public corporate bond in Asia.
“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. DLT and smart contracts are rapidly evolving technologies, and our vision is to fully digitalise the end-to-end corporate bond issuance and asset servicing process. We look forward to playing a part in strengthening the fixed income market infrastructure of Singapore, Asia’s fixed income hub for bond issuers.”
SGX also utilised the smart contract language created by Digital Asset, DAML. This language was used to model the bond and its distributed workflows for issuance and asset servicing across the product’s lifecycle.
“Olam is delighted to pilot Asia’s first digital bond in close partnership with SGX, Temasek and HSBC,” added N Muthukumar, Managing Director and Group CFO of Olam International in the statement.
“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. This is in line with Olam’s focused push into digitalisation as part of our refreshed strategy, to grow sustainably and live our purpose of re-imagining global agriculture and food systems.”