Singapore Change (SGX), working along with HSBC Singapore and Temasek, has accomplished its first digital bond issuance on SGX’s digital asset issuance, depository, and servicing platform, efficiently replicating a S$400 million 5.5-year public bond subject and a follow-on S$100 million faucet of the identical subject by Olam Worldwide.
An Asia first for a syndicated public company bond, this digital bond marks one other milestone in SGX’s use of digital asset know-how, by streamlining processes for issuers, underwriters, traders, and ecosystem members throughout major issuance and asset servicing. SGX utilised DAML, the sensible contract language created by Digital Asset, to mannequin the bond and its distributed workflows for issuance and asset servicing over the bond’s lifecycle.
SGX’s resolution makes use of sensible contracts to seize the rights and obligations of events concerned in issuance and asset servicing, equivalent to arrangers, depository brokers, authorized counsel and custodians. The digital bond used HSBC’s on-chain funds resolution which permits for seamless settlement in a number of currencies to facilitate switch of proceeds between the issuer, arranger and investor custodians.
Key efficiencies noticed throughout the pilot embody well timed ISIN (identifier) era, elimination of settlement threat (for issuer, arranger and traders), discount in major issuance settlement (from 5 days to 2 days) in addition to automation of coupon and redemption funds and registrar performance.
Constructing on this digital issuance, SGX will work with issuers, arrangers, custodian banks and traders to digitalise bond issuance, depository and asset servicing, progressively rising the fastened earnings ecosystem.
Lee Beng Hong, Senior Managing Director, Head of Fastened Revenue, Currencies and Commodities (FICC), SGX, stated, “We’re very excited that this collaboration with HSBC and Temasek has led to the profitable completion of the primary digital syndicated public company bond in Asia. Debt capital markets globally are characterised by deeply engrained legacy techniques and processes which will be made sooner, extra correct and environment friendly with this new know-how. DLT and sensible contracts are quickly evolving applied sciences, and our imaginative and prescient is to totally digitalise the end-to-end company bond issuance and asset servicing course of. We sit up for enjoying an element in strengthening the fastened earnings market infrastructure of Singapore, Asia’s fastened earnings hub for bond issuers.”
David Koh, Head of International Liquidity and Money Administration, HSBC Singapore, stated, “We’re proud to be working intently with SGX and Temasek to drive sooner, extra clear, and absolutely safe settlements for bond issuers and traders. This primary digital bond issuance for Olam Worldwide reveals how our on-chain resolution can fulfil fee wants in DLT-based ecosystems, and demonstrates our need to form and take part within the subsequent era of asset networks, to higher service our securities companies purchasers. We sit up for bringing this know-how to our purchasers in Singapore and past.”
Chia Track Hwee, Deputy Chief Govt Officer at Temasek, added, “Modern applied sciences equivalent to blockchain know-how are key enablers that may rework processes and techniques to create game-changing alternatives. We’re happy to have partnered SGX, HSBC and Olam on this initiative. The profitable bond issuance validates the potential for issuances of different belongings and merchandise, and marks an necessary milestone in the direction of bettering monetary processes and workflows.”
N Muthukumar, Managing Director and Group CFO of Olam Worldwide, stated, “Olam is delighted to pilot Asia’s first digital bond in shut partnership with SGX, Temasek and HSBC. Going digital will make the complete course of extra environment friendly and clear for all events – issuers like us obtain our funds extra speedily, traders get their bonds extra rapidly whereas the arrangers, custodian and banks profit from the diminished chance of error and pace. That is in keeping with Olam’s targeted push into digitalisation as a part of our refreshed technique, to develop sustainably and reside our goal of reimagining world agriculture and meals techniques.”
“The bond market is without doubt one of the final bastions of threat, holding on to paper and guide processes,” stated Yuval Rooz, Co-founder and CEO, Digital Asset. “Regardless of the expansion in digital bond buying and selling, there are nonetheless many points that require guide intervention. SGX’s DAML sensible contract resolution solves a serious ache level market members have been working to repair for years. We sit up for our continued work with SGX as they transfer to digitise the end-to-end bond issuance course of.”