Fixed income digital assets: Unpacking Digital Bond Issuance
HSBC has been pioneering the exploration of digital assets to transform capital markets infrastructure in Asia, supporting the development of new technologies which promote economic growth and financial stability.
In Singapore, HSBC has been working with Singapore Exchange (“SGX”) and Temasek Holdings (“Temasek”) to explore how Smart Contracts and Distributed Ledger Technology (DLT) can be used to enhance efficiencies in the bond issuance process.
Bond issuance is a multi-party work flow, involving over 2,500 individual steps. Our project to explore digital assets in the bond issuance process aims to enable digitally-driven financial market infrastructure for an end-to-end issuance, depository and asset servicing platform for Asian bonds.
“Using DLT, we are creating a single source of data that brings transparency, consistency and removes duplication. As adoption increases we expect a reduction in the cost of managing the back-end processes of new issuance and asset servicing. ” – Noor Adhami, Head of Securities Services, Singapore
The pilot bond issuance, which replicated an issuance by Olam International in August 2020, was a First in Asia for digital syndicated public corporate bonds. Since then, HSBC has continued to partner with SGX and Temasek on their joint venture, Marketnode, launched in January 2021, to complete several successful digital bond issuances, including a S$1 billion perpetual securities issue by Singtel and S$600m of Perpetual Capital Securities at 2.55% by UOB.
“The benefits of DLT are spread across the issuance chain. Amongst others, efficiencies and cost savings can be seen through process automation, interoperability between the traditional and digital securities lowers the risks of adoption for issuers and investors, and shorter settlement times significantly reduces the liquidity risks undertaken by banks.” – Noor Adhami, Head of Securities Services, Singapore
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