Blockchain

CGS-CIMB Issued S$150-Million Commercial Paper in Digital Securities on iSTOX

CGS-CIMB Securities International, an integrated financial service provider in Asia, and digital securities platform iSTOX announced the issuance of a short-term debt instrument in the form of digital securities.

The S$150-million (US$112-million) multi-tranche commercial paper will be used to fund operating expenses and near-term obligations of CGS-CIMB.

The first tranche of S$10 million was over-subscribed by accredited individual and corporate investors on the iSTOX platform.

Investors were offered a 1% per annum interest rate over 3 months. The full S$150-million programme is being carried out using digital securities, with no traditional issuance happening alongside the digital channel.

The CGS-CIMB commercial paper is the first in a new product line of digital commercial papers by iSTOX, a multi-asset platform that also facilitates digital issuances for other private market securities, including funds, bonds and equity. Commercial papers are short-term debt issued by companies, with tenures ranging from 1 to 270 days.

The commercial paper market is worth over US$1 trillion in the US and over US$950 billion in Europe. Asian companies have historically been more accustomed to raising funds through bank loans or bonds or through issuing equity, but commercial papers are gaining momentum.

The CGS-CIMB digital commercial paper is now listed for trading on the iSTOX secondary exchange, giving investors the option to cash out ahead of maturity.

The paper matures 3 months from its issuance, after which investors can decide whether to subscribe for a fresh 3-month term. If the next tranche is oversubscribed, subscribers of the current tranche will be guaranteed an allocation if they choose to roll over their investments.

The 364-day commercial paper programme provides for multiple tranches over the next few quarters, up to a maximum amount of S$150 million, a figure that can be increased should the need arise. Taurus Point Capital was the adviser to CGS-CIMB for this issuance.

iSTOX is a global private market platform. Using blockchain and smart contract technology, iSTOX automates manual processes in the issuance, custody and post-sale management of a security, such as the payment of dividends or coupons, the real-time tracking of ownership, and the settling of trades, which happens instantly on the iSTOX exchange instead of the 2 or more working days needed by most exchanges.

Carol Fong

Carol Fong, Group Chief Executive Officer of CGS-CIMB said,

“This is the first commercial paper programme we have done in digital securities form, and it allows us to tap an alternative source of funding and a wider spectrum of investors.

In working with iSTOX to launch this programme, we were pleasantly surprised that it was completed in half the time a traditional issuance would usually take. Through this collaboration, we are keen to explore first-hand what digital assets and exchanges might hold for us as a broker in the future.”

Oi Yee Choo

Oi Yee Choo, Chief Commercial Officer of iSTOX said,

“In this commercial paper programme, CGS-CIMB as an issuer was able to realise the maximum benefits of digital securities because they chose a 100% digital route, with no traditional issuance carried out alongside it.

This significantly reduced the need to work with multiple intermediaries, which made the issuance faster and more cost efficient.”

Founded in 2017, iSTOX is fully regulated by the Monetary Authority of Singapore.

The financial technology company is backed by Singapore Exchange, Temasek-subsidiary Heliconia Capital and Japan government-backed investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan (DBJ).