European real estate firm Vonovia has reportedly issued a €20 million digital bond on the Stellar blockchain or distributed ledger tech (DLT) platform through a partnership with firstwire, a web-based marketplace for handling debt financing, and Bitbond, which is Germany’s tokenization and digital asset custody tech solution provider.
Vonovia’s management noted that the digital bond with a 3-year term was a key part of its business strategy, which involves digitizing its finance division.
Vonovia has already used the platform, which aims to directly connect issuers with investors in real-time. Vonovia has previously placed a promissory note of €50 million via the platform in September 2019.
Vonovia’s management claims that the security tokens adhere to strict security standards. They have been used for the transfer of ownership of the digital bond. On the investor side, the digital tokens aim to provide new perspectives for the banking institutions and their clients.
Joachim Olearius, the spokesperson for the partners of the owner-managed M. M. Warburg & Co., noted that tokenization could “significantly expand and structurally change the range of financial products and services.” M. M. Warburg & Co. had carried out this transaction.
This announcement comes after the German cabinet recently approved a bill introducing digital securities. The bill intends to drive or support the digitalization of Germany’s financial marketplace and meet an important requirement of the government’s blockchain or DLT strategy for promoting more transparency, market integrity and offering better investor protection.
Helene von Roeder, Chief Financial Officer of Vonovia, stated:
“Digitalization provides us with the opportunity to finance ourselves faster, more easily and more cost efficiently. We want to test out the new technology to gain experience with it. It’s easy to imagine that it will play a significant role in the capital market in the future. Issuances are transparent and traceable in real time, which guarantees a professional transaction standard. Additionally, we can use it to approach new investors around the globe.”
Michael Dreiner, CEO and founder of the online marketplace firstwire, said this latest transaction represents a key milestone because it introduces the use of digital tokens to the institutional capital market and could potentially streamline the traditional bond markets.
“In light of the planned legislation of electronic securities, this transaction demonstrates how bond issuances can be conducted in the future. On firstwire, companies can now conclude their transactions digitally and in real time, meaning instant settlement and no multi-day settlement risk anymore.”