Private market exchange ADDX Pte. Ltd., regulated by the Monetary Authority of Singapore, has launched the blockchain-based ADDX Fixed Income Marketplace and pioneered a Multi-Issuer Debt Issuance Program for companies to conveniently issue digitized commercial paper and bonds.
The Digitized Bonds are expected to “be listed and tradeable on ADDX FI, the securities trading platform’s dedicated segment for commercial paper and bonds.”
To date, over S$1bn (US$730 million) in new money has “been raised in digitized commercial paper through ADDX’s platform.”
ADDX Group CEO, Danny Toe, comments:
“In today’s dynamic business landscape, the need for accessible and cost-effective funding avenues has never been more pressing. ADDX’s new digitised bond program and marketplace address the challenges of traditional funding by offering a lower-cost, lower-friction pathway for businesses to diversify their funding sources. Beyond facilitating transactions, they also serve as catalysts for establishing and building enduring relationships among issuers, investors and partners within the financial ecosystem.”
The inaugural offering in connection “with the Program closed on 2 April 2024 for S$10 million (US$7.4 million) 6.00% per annum 5-month unsecured commercial paper issued by LHN Limited, a real estate services company incorporated in Singapore and listed on the Singapore Exchange Securities Trading Limited (SGX:41O) and the Hong Kong Stock Exchange (HKEX:1730).”
With orders totaling S$17.161 million (US$12.61 million), demand “for the issuance significantly surpassed the initial offer size of S$5 million (US$3.7 million), representing an oversubscription of 343%.”
This resulted in the issuer’s decision “to upsize the issuance to S$10 million (US$7.4 million), the maximum amount authoried by its board.”
The issuance marked the issuer’s successful entry “into the debt capital markets.”
The innovative program streamlines “the issuance process, uniquely allowing different issuers to utilize umbrella terms to access alternative debt funding quickly, efficiently and reliably.”
This enables issuers, including debut issuers, “to come to market in a matter of days and issue fairly-priced commercial paper and bonds on ADDX FI, without incurring the time and costs normally associated with establishing an independent medium term note or debt issuance program.”
With the Program, issuers may expect savings of “up to 90% or more in issuance costs.”
The Program provides issuers “with the flexibility to specify currencies, denominations, fixed or floating coupon rates, tenors and other commercial terms using an on-off, easy-fill format. Issuers and investors additionally benefit from the efficiencies of bond digitization with ADDX’s permissioned blockchain technology.”
Manual, time-consuming processes “are reduced while enhancing security, eliminating the need for traditional intermediaries and services and giving rise to considerable cost savings for issuers and investors. Investors may generally expect to receive their investments, and issuers their subscription proceeds, on the date of closure of the subscription period.”
ADDX welcomes companies of “all sizes, public and private, to come on board to ADDX FI. Small-cap and mid-cap companies listed on the SGX-ST and other reputable exchanges are expected to benefit the most from using the Programme in enabling them to expand their pool of financing sources beyond shareholders and traditional bank lenders by obtaining alternative debt funding cost-effectively, without the need to prepare extensive business disclosures and offering documents.”
With more issuers in the future, ADDX expects offerings “on ADDX FI to meet investors’ substantial appetite for yield and exposure to fresh and diversified names and sectors.”
On ADDX FI, accredited and institutional investors “can access commercial paper and bonds, typically only available in wholesale denominations of S$200,000 or more, in subscription amounts as low as S$5,000 or US$5,000.”
Each issuance of Digitised Bonds by an issuer “is distinctly the obligation of that issuer, and not of any other issuer under the Program.”
The Programme documentation is formulated “for a variety of regional and global issuers and includes a toggle for Singapore governing law or English governing law, maximizing the investor outreach opportunity. Moriah Law LLC and Mishcon de Reya LLP acted for ADDX on the establishment of the Programme in respect of Singapore law and English law, respectively. Moriah Law LLC acted for ADDX in respect of the inaugural issuance.”
ADDX is regulated by the Monetary Authority of Singapore and “holds a Capital Markets Services License for dealing in capital markets products and providing custodial services. It also holds a license as a Recognized Market Operator.”