HSBC and Singapore Exchange Execute Successful $300M Digital Bond Issuance

One of Asia’s first digital bonds has been piloted in Singapore – opening the door for more such issuances using distributed ledger technology (DLT).

International bank HSBC, Singapore Exchange (SGX), and Singapore government-owned investment firm Temasek said Tuesday their pilot for the DLT-based bond – first mooted last November – had been successful.
Per an announcement, S$400 million (around $294 million) worth of 5.5-year corporate bonds from Olam International – one of the world’s largest coffee bean, rice and cotton suppliers – were issued on SGX’s digital asset platform.
SGX said the pilot showed DLT could streamline issuances and minimize settlement risk in the Asian bond market.
The Asian Development Bank estimated in March that the region’s local currency bond market was worth approximately $16 trillion last December, up 12.5% on the year before.
The digital bond used smart contracts to codify rights and obligations, as well as its maturity, into the bond itself.
An on-chain payments solution from HSBC was also used to facilitate settlement in multiple currencies, as well as to transfer funds to Olam International.
Olam, which is listed on SGX, has held back a further S$100 million (roughly US$74 million) in the digital bonds for issuance at a later date.
SGX plays host to one of Asia’s largest bond markets and says it has issued over a $1 trillion in debt securities so far.
Lee Beng Hong, the SGX senior managing director responsible for the pilot, said the exchange is now moving to fully digitalize corporate bond issuances on its platform.
It’s unclear whether other issuances are already in the pipeline.

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