DBS First Bank in the Region to Issue Security Token at S$15 Millionby Fintech News Singapore May 31, 2021
DBS announced that it has priced an SGD 15 million digital bond, marking DDEx’s first Security Token Offering (STO) as part of efforts to broaden the suite of products on the DBS Digital Exchange (DDEx).
The DBS Digital Bond, which comes with a six-month tenor and coupon rate of 0.60% 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 USD 4.73 trillion in 20202.
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.
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.
The bank said that DDEx has enjoyed strong market traction since its launch. Daily trading volumes have increased 10-fold from the initial week of launch, and the exchange currently serves over 120 participants.
DBS also holds over SGD 80 million in digital assets in its custodial services.
“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.
We expect asset tokenisation to increasingly become more mainstream as more of our clients start to embrace security token issuance as part of their capital fund raising exercise which we believe will boost Singapore’s ambitions to be a digital asset hub in Asia,”
Clifford Lee, Global Head of Fixed Income at DBS said this marks the first of many steps in the journey to evolve the traditional bond issuance into a broader digital ecosystem where more inclusive issuer and investor participation can be rapidly developed.
“While most bond tokenisation exercises announced in Asia to date tend to be repackaged forms of a conventional bond issue, the current transaction directly combines existing legal and tax infrastructure requirements with a direct issuance on the digital exchange in smaller lot sizes.
This bond token structure was only made possible because of the progressive development of Singapore’s legal and tax infrastructure, which can facilitate more STO issuances to broaden and deepen our capital markets,”