Facilitates a new avenue for issuers, investors and dealer banks to interact digitally.
Financial institution, DBS has priced an SG$15 million digital bond, marking it one of DBS Digital Exchange’s (DDEx) first Security Token Offering (STO). The DBS Digital Bond, which comes with a six-month tenor and coupon rate of 0.60 per cent per annum, was done by way of private placement. DBS is the sole bookrunner for the transaction.
This paves the way for other issuers and clients to tap on DDEx’s capabilities to efficiently access capital markets for their funding needs and sets the stage for more STO issuances and listings on DDEx as asset tokenisation turns mainstream.
Eng-Kwok Seat Moey, Group Head of Capital Markets at DBS, noted that asset digitalisation via the issuance of Security Tokens presents a tremendous opportunity for corporates seeking alternative platforms such as DDEx to raise funds from Asia-Pacific’s burgeoning private capital markets. The Asia-Pacific region currently accounts for nearly one-third of the global private equity market, which reached a record US$4.73 trillion in 2020.
The DBS Digital Bond strictly adheres to the current bond legal framework, thereby according investors the same legal certainties and protections over their rights as traditional bonds.
To encourage broader participation from investors, the digital bond will be traded in board lots of SGD 10,000.
This is a significantly smaller denomination compared to traditional wholesale bonds, which typically require investment and trading amounts in multiples of SGD 250,000. This also highlights DDEx’s ability to offer tokenised assets for trading at much smaller denominations as compared to traditional venues and conventional securities, driving liquidity and lowering barriers to access for investors.
With the listing of the Digital Bonds on DDEx, the securities are now available for secondary trading among institutional and accredited investors who are either members or applicable end clients of members of DDEx.
Launched in December 2020, DDEx is part of an integrated digital asset ecosystem which leverages on blockchain technology to provide clients with a secure and transparent platform to raise funds from the private market. It also provides an avenue for investors to invest in and trade traditionally illiquid asset classes. Participants can also benefit from comparatively shorter settlement cycles and tap on institutional grade custodial services provided by DBS Bank.