Multinational Singapore-based DBS Bank has issued SGD $15 million digital bond in its first security token offering (STO). According to the Press Release, the DBS digital bond issued via its Digital Exchange (DDEx), with six month tenor and coupon rate of 0.6% per annum.
The DBS bank is reportedly the sole bookrunner for the transaction. The digital bond will be traded in a bond lot of SGD 10,000(appr. $7,560). If we compare it with traditional wholesale bonds this is a very small denomination. It requires investment and the trading amount in multiple of SGD 250,000.
DBS said transaction help paves the way for other issuers and clients to leverage DDEx’s capabilities “to gain access to capital marketing” for their funding requirement.
Launched in 2020 December, DDEx becomes part of an integrated digital asset ecosystem. It utilizes blockchain or distributed ledger tech (DLT) to offer a secure and transparent platform.
The bank said that DDEx has strong market traction since its launch. Daily trading volume has increased 10 fold from the initial week of launch. The exchange currently serves over 120 participants.
Eng-Kwok Seat Moey, group head of the capital market at DBS said:
“Our maiden STO listing on the DBS Digital Exchange is a significant milestone, as it highlights the strength of our digital asset ecosystem in facilitating new ways of unlocking value for issuers and investors”.
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The listing demonstrates the bank’s ability to provide integrated solutions across the digital asset value chain, she said. Bank expects tokenization to become more mainstream as our client embraces STO issuance as part of their capital fund-raising exercises.
“While most bond tokenization exercise announced in Asia to date tend to be repackaged form of a conventional bond issue the current transaction directly combines existing legal and tax infrastructure requirement with direct issuance on the digital exchange in smaller lot sizes,” said Clifford Lee, DBS, global head of fixed income.
