A CHINA Construction Bank (CCB) unit in Malaysia said it is raising funds through the issuance of an up to US$3 bil (RM12.42 bil) bond using blockchain, the first such security to be publicly listed.
The first tranche of the bond will be tradable on Malaysian digital asset-focused FUSANG Exchange from Friday and investors, both retail and institutional, can buy into it using bitcoin as well as US dollars, a statement from FUSANG and CCB said.
The listing is the latest step by banks towards using blockchain, the technology underpinning bitcoin, to issue bonds and other securities, which could make the bookbuilding and allocation process cheaper and more efficient.
Many newly established exchanges that are focused on digital assets or cryptocurrencies hope to facilitate the technological shift, which they say would allow previously illiquid assets to be securitised and traded.
The bond was issued by Longbond Ltd, a special-purpose vehicle established to issue digital bonds and deposit the funds with CCB’s branch in Labuan, an offshore financial centre in Malaysia.
CCB Labuan was the lead arranger and listing sponsor of the bond which will offer an annualised rate of Libor + 50 basis points.
Steven Wong, chief operating and financial strategist at CCB(Malaysia) said the purpose of the exercise for the bank was both to see whether it was technically possible to issue a bond on a blockchain through an exchange and to determine the depth of the market for such a product.
“Companies have issued blockchain-based bonds as a (proof of concept) before, but none of these bonds have ever been publicly listed and available to global investors including retail investors,” said FUSANG Exchange’s chief executive.Henry Chong.
Some digital exchanges are considering securitising and listing more complicated products such as art or commercial property projects, but Chong said the issuance showed that the technology could have value for traditional products too. – Nov 11, 2020
