Today ABN Amro announced it issued a €450,000 bond on a public blockchain on behalf of APOC Aviation, an aircraft parts company. The Dutch bank used its experience from buying and reselling the European Investment Bank’s public blockchain bonds and is working with clients in the Netherlands and Germany on additional tokenized bonds.
The bond’s entire issuance process was digital, including the preparation, placement and documentation. This particular issuance targeted wealth management clients, so accredited investors rather than institutions, who store the digital assets in a wallet.
Ownership of the digital asset was recorded on the Stellar blockchain after payment was received. Hence conventional payment was used. In the past, ABN Amro has also worked with Ethereum and private blockchains.
ABN Amro had help with the wallet from tokenization firm Bitbond and crypto firm Fireblocks which is best known for its custody. The Netherlands was the jurisdiction of the bond.
The benefits of using blockchain for bond issuance include expanding the investor base (with public blockchain) and reducing the issuance costs.
“This updated digital solution for providing our medium-sized and larger commercial clients with leveraged financing fills a gap between traditional bonds and crowdfunding,” said ABN AMRO’s Chief Strategy & Innovation Edwin van Bommel. “Thanks to the blockchain, it’s highly efficient and very client-friendly.”
The bond market is seen as one of the key areas of opportunity for institutions and several banks have already entered the fray. However, only Societe Generale, Santander and BNP Paribas have managed public blockchain issuances, and in most cases, it was on behalf of its own bank. The exceptions were the issuance for the European Investment Bank (EIB) and BNP Paribas‘ project finance bond for EDR ENR. Now ABN Amro is one of the earlier institutions to issue a corporate bond on a public blockchain on behalf of a client.
Many others are launching blockchain bond issuance platforms. The SIX Digital Exchange (SDX) launched one of the largest tokenized bond issuances so far, a CHF 375 million ($370m) hybrid bond for UBS where investors can opt for the native SDX CSD or the conventional SIX SIS securities depositary.
Goldman Sachs unveiled its digital asset tokenization platform with the EIB’s second €100 million bond, this time on a permissioned blockchain. HSBC is preparing to launch its Orion DLT-based bond tokenization platform and the EIB might use it for a GBP tokenized bond.
Update: The article has been updated with additional details regarding the blockchain used, jurisdiction and target investors
