UNION Bank of the Philippines (UnionBank) announced it successfully issued the country’s first-ever offering of digital peso bonds, raising P11 billion worth of 1.5-year fixed rate bonds.
The digital bonds were issued as a “proof-of-concept” through the digital registry and digital depository, a new blockchain-powered infrastructure by the Philippine Depository & Trust Corp. (PDTC) and Philippine Dealing & Exchange Corp. (PDEx) in partnership with the Singapore based financial technology company Hashstacs Pte. Ltd.
“Despite the volatile rate environment, the digital bond offering garnered robust participation from retail and institutional investors resulting to an 11-times oversubscription rate from the initial offer size of P1 billion,” a statement from UnionBank read. It added that Standard Chartered Plc. supported the initiative as one of the joint lead arrangers, bookrunners and selling agents for the offering.
The lender added that the achievement of this “proof-of-concept” issuance “paves the way for the potential widespread adaptation of distributed ledger technology (DLT) in the local capital markets.”
“A first in the Philippines, this issuance further unlocks the potential of blockchain technology to be a gamechanger and great disruptor in finance,” UnionBank Treasurer and Head of Global Markets Jose Emmanuel U. Hilado was quoted in the statement as saying.
Orders tokenized
UNIONBANK said it was in 2020 when it partnered with Standard Chartered Plc. in the successful completion of a proof-of-concept for the issuance of a retail bond on a digital platform leveraging blockchain technology for bond tokenization.
“Orders received were tokenized, and to stay within existing retail bond guidelines, tokens issued mirrored the traditional transaction but were not allocated directly to investors,” the lender said. SC Ventures Inc., built and co-created the bond tokenisation platform with UnionBank, added the ninth-largest bank in total assets.
According to Standard Chartered Plc. Executive Aaron Gwak, the success of these “proof-of-concept” issuances demonstrates “how the power of blockchain technology is shaping the future of capital markets.”
“We have seen the dynamic development of digital bonds in the Asean [Association of Southeast Asian Nations] region with UnionBank’s maiden offering of digital bonds in the Philippines being the latest addition,” Gwak, Standard Chartered’s managing director and head of capital markets for Asean, was quoted in the statement as saying. “While this issuance utilizes DLT for the backend infrastructure for the registry and depository operations, this serves as a stepping stone to further enhance infrastructure for investor experience towards full democratization of bonds.”
“Access to capital markets is an important enabler of progress and economic growth,” Lynette V. Ortiz, Standard Chartered Plc.’s CEO for its Philippine office, was quoted in the statement as saying. “This successful issuance opens a host of possibilities in the digital bond space, and another step towards financial inclusion.”