State-owned bank KFW has issued another €9 billion in digital bonds via the Clearstream D7 platform. This is the fourth set of digital bond issuances by KfW on D7, bringing its total on the platform to €17.5bn. D7 uses the Digital Asset DAML/Canton DLT technology, although this was a centralized issuance under German law.
This latest issuance will take the total volume issued on Clearstream’s D7 over the €20 billion, after surpassing €10 billion last October. The D7 platform has also been heavily used by others for tens of thousands of small structured product issuances.
This month’s KfW issuance involved two tranches. One tranche was a €3 billion, 10 year bond with a 2.75% coupon. The other was a €6 billion, 3 year bond with a 2.375% coupon.
KfW issued a small trial bond of €20 million on D7 in 2022. Then last July it launched a €4 billion bond which ended up being €5 billion and another €3.5 billion in October.
Germany’s Electronic Securities Act (eWpG) allows for digital issuances that use a centralized securities depositary (CSD), such as this one, as well as those that use a DLT without a CSD, which are referred to as crypto securities. As we previously noted, other CSD platforms involving DLT, such as the Hong Kong CMU using the HSBC Orion DLT, are a little less centralized because direct participants on the DLT can clear and settle atomically.
KfW has also been involved in multiple crypto securities issuances, although at a far smaller scale. Last July it issued its first €100 million syndicated bond on the Polygon blockchain and described demand as ‘heavy’. The following month it issued a €50 million bearer bond settled using the Bundesbank trigger solution as part of the ECB wholesale DLT trials.
