ABN AMRO issues tokenized corporate bonds on public blockchain – Ledger Insights
Today, ABN Amro announced that it issued a €450,000 bond on a public blockchain on behalf of APOC Aviation, an aircraft parts company. The Dutch bank used its experience in buying and reselling the European Investment Bank’s public blockchain bonds and is working with clients in the Netherlands and Germany on additional tokenized bonds.
The bond’s entire issuance process was digital, including preparation, placement and documentation. This particular issue was aimed at wealth management clients, so accredited investors rather than institutions, who store the digital assets in a wallet.
Ownership of the digital asset was recorded on the Stellar blockchain after the payment was received. Therefore, 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 issuances include expanding the investor base (with public blockchain) and reducing issuance costs.
“This updated digital solution to provide our medium and larger commercial clients with leveraged finance fills a gap between traditional bonds and crowdfunding,” said ABN AMRO’s Chief Strategy & Innovation Edwin van Bommel. “Thanks to the blockchain, it’s very efficient and very customer-friendly.”
The bond market is seen as one of the most important areas of opportunity for institutions and several banks have already entered the fray. However, only Societe Generale, Santander and BNP Paribas have managed public blockchain issues, and in most cases it was on behalf of their own bank. The exceptions were the issuance of the European Investment Bank (EIB) and BNP Paribas’ project finance bond for the EDR ENR. Now, ABN Amro is one of the first institutions to issue a corporate bond on a public blockchain on behalf of a client.
Many others are launching blockchain bond issuance platforms. SIX Digital Exchange (SDX) launched one of the largest tokenized bond issues to date, a CHF 375 million ($370 million) hybrid bond for UBS where investors can choose the native SDX CSD or the conventional SIX SIS securities depository.
Goldman Sachs unveiled its digital asset tokenization platform with the EIB’s second €100 million bond, this time on a permissioned blockchain. HSBC is preparing to launch its Orion DLT-based bond tokenization platform, and the EIB could use it for a GBP tokenized bond.
Update: The article has been updated with additional details on the blockchain used, jurisdiction and target investors
