DBS has priced a $15 million digital bond, the first security token offering (STO) on the DBS Digital Exchange (DDEx) which launched last December.
The six-month digital bond has a coupon rate of 0.6% per annum, and was done through a private placement. DBS is the sole bookrunner for the transaction.
According to DBS, the digital adheres to the current bond legal framework, thereby according investors the same legal certainties and protections over their rights as traditional bonds.
The digital bond will be traded in board lots of $10,000, a significantly smaller denomination compared to traditional wholesale bonds, which typically require investment and trading amounts in multiples of $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.
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Eng-Kwok Seat Moey, group head of capital markets at DBS, noted that asset digitalisation via the issuance of security tokens presents an opportunity for corporates seeking alternative platforms such as DDEx to raise funds from Asia-Pacific’s private capital markets.
“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,” Eng-Kwok says.
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” he says.
DBS states that the exchange currently has over 120 participants, while daily trading volumes have “increased 10-fold from the initial week of launch”. DBS also holds over $80 million in digital assets in its custodial services.
As at 3.39pm, shares in DBS were 39 cents or 1.28% lower at $30.02.
