A report from earlier this week in Sina indicates that the Bank of China has issued Yuan 20 billion (USD $ 2.8 billion) in “special finance bonds” for small and micro firms. For the issuance, the Bank of China used a “self-developed blockchain bond issuance system.”
The bond is said to be a 2 year fixed rate security with a 3.25% coupon. The issuance was reportedly oversubscribed 2.7 times.
To quote Sina [translated]:
“It is worth noting that ….the Bank of China also used the self-developed blockchain bond issuance system. It is understood that the system covers three stages, including bond issuance preparation, bookkeeping filing, and pricing and placement. It is can simultaneously support four types of entities such as bond issuers, bookkeepers, underwriters and direct investors. It has eight functions including bond creation, element information maintenance, announcement release, underwriting syndicate formation, network disk file management, bond purchase, order summary, pricing, and placement.”
This is not the first bond offering, either large or small, managed using blockchain technology.
The World Bank in 2018 issued an A $110 million bond in partnership with the Commonwealth Bank of Australia.
This past April, Societe Generale issued a covered bond (“obligations de financement de l’habitat” or “OFH”) for a total amount of €100 million. The security token was rated Aaa / AAA by Moody’s and Fitch. The security token issuance used Ethereum and was fully subscribed by Societe Generale.
There have been others.
China has targeted blockchain technology or distributed ledger technology (DLT) as strategically important. Currently, the government is working on the issuance of a central bank digital currency which will be managed, in part, with blockchain technology.
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