TodayĀ ABN AmroĀ announced it issued a ā¬450,000 bond on a public blockchain on behalf of APOC Aviation, an aircraft parts company. The Dutch bank used its experience from buying and reselling theĀ European Investment BankāsĀ public blockchain bonds and is working with clients in the Netherlands and Germany on additional tokenized bonds.
The bondās entire issuance process was digital, including the preparation, placement and documentation. This particular issuance targeted wealth management clients, so accredited investors rather than institutions, who store the digital assets in a wallet.
š„Ownership of the digital asset was recorded on the Stellar blockchainš„ after payment was received. Hence conventional payment was used. In the past, ABN Amro has also worked with Ethereum and private blockchains.
ABN Amro had help with the wallet from tokenization firm Bitbond and crypto firm Fireblocks which is best known for its custody. The Netherlands was the jurisdiction of the bond.
The benefits of using blockchain for bond issuance include expanding the investor base (with public blockchain) and reducing the issuance costs.Ā
āThis updated digital solution for providing our medium-sized and larger commercial clients with leveraged financing fills a gap between traditional bonds and crowdfunding,ā said ABN AMROās Chief Strategy & Innovation Edwin van Bommel. āThanks to the blockchain, itās highly efficient and very client-friendly.ā
The bond market is seen as one of the key areas of opportunity for institutions and several banks have already entered the fray. However, onlyĀ Societe Generale,Ā SantanderĀ and BNP Paribas have managed public blockchain issuances, and in most cases, it was on behalf of its own bank. The exceptions were the issuance for theĀ European Investment BankĀ (EIB) andĀ BNP Paribasā project finance bond for EDR ENR. Now ABN Amro is one of the earlier institutions to issue a corporate bond on a public blockchain on behalf of a client.
Many others are launching blockchain bond issuance platforms. The SIX Digital Exchange (SDX) launched one of the largest tokenized bond issuances so far, a CHF 375 million ($370m) hybridĀ bond for UBSĀ where investors can opt for the native SDX CSD or the conventional SIX SIS securities depositary.
Goldman SachsĀ unveiled its digital asset tokenization platform with the EIBās second ā¬100 million bond, this time on a permissioned blockchain. HSBC is preparing to launch itsĀ Orion DLT-based bondĀ tokenization platform and the EIB might use it for a GBP tokenized bond.Ā