Fusang Exchange, a licensed Malaysian digital securities platform, is to issue its first blockchain bond in association with the Malaysian subsidiary of the China Construction Bank (CCB), the world’s second-largest bank. While the announcement claims a $3 billion target size, the initial blockchain token issuance seems to be $14 million.
The bond is a securitization of a special purpose vehicle LongBond Ltd set up to issue the bonds. The proceeds will be deposited at CCB Labuan in a trust account, and Fusang claims the loan notes are “fully secured obligations ultimately backed by the balance sheet of the world’s second largest bank”. However, the token liability belongs to LongBond and the trust account deposits will be a liability of the Libuan branch and subsidiary of CCB. Costs will come out of the trust deposit account and there is no estimate of those costs.
CCB Labuan also acts as lead arranger and listing sponsor but does not stand behind the prospectus.
The issuance is only available to investors outside of Malaysia apart from Labuan. In true tokenization fashion, the token amounts are small, $100, and can be traded in USD or Bitcoin. However, fractions of the tokens cannot be traded. The coupon offered is LIBOR + 50bps.
“Issuers no longer need to operate in a fragmented environment with multiple process flows as FUSANG’s end-to-end platform streamlines their needs, from issuance to listing, in one place,” said Henry Chong, CEO of Fusang Exchange. “Moreover, global investors can now benefit from access to an investment previously reserved for only the largest institutions, together with low and transparent fees.”
Fusang uses technology from Securitize.
We have reached out to CCB Malaysia for confirmation and with some questions and will update the article with any response.
Meanwhile, Bursa Malaysia is also exploring tokenizing bonds via its subsidiary Labuan International Financial Exchange (LFX), which operates an existing bond market.
Bond markets around the world are actively deploying blockchain. These include government bonds that have been issued in the Philippines and Thailand and Japan’s BOOSTRY backed by SBI and Nomura. In Singapore, SGX used its blockchain platform to issue a SGD 400 million ($295 million) bond.
