Portion of the $ 682 million bond of industrial giant Sembcorp, the latest asset to be tokenized

A sustainability bond has been tokenized for blockchain trading, as more institutions realize the efficiency and reduced costs offered by crypto platforms.

Singapore-based United Overseas Bank (UOB) partnered with digital stock exchange ADDX to symbolize S $ 50 million (A $ 50.5 million) of the $ 675 million sustainability bond issue. in Singapore dollars (A $ 682 million), by energy and urban development company Sembcorp.

The 10-and-a-half-year sustainability bond is due in 2032 and priced at a coupon of 2.66 percent per year – but if Sembcorp does not meet its greenhouse gas reduction targets by the end of 2025, the rate increase by 0.25 points per year.

“At UOB, we believe in being at the forefront of delivering progressive financial solutions that meet the needs of businesses,” said Frederick Chin, Head of Wholesale Banking and Markets. UOB group.

“It means anticipating market trends and having the foresight to enter into new collaborations with like-minded parties, such as ADDX. “

The collaboration will help corporate clients reap the security, time and cost benefits of digital bond issuance, Chin said.

ADDX uses an authorized version of Ethereum, allowing accredited investors around the world to trade on its regulated platform.

“The use of distributed ledger technology and asset tokenization has great potential to radically improve the functioning of capital markets in the future and it is important that our clients can take advantage of these new technologies,” Chin said.

ADDX Commercial Director Oi Yee Choo said, “Over the past year, digital securities have achieved a high degree of acceptance among blue chip issuers of bonds and other securities in the world. world”.

Digital securities are particularly well suited for sustainability-related bonds, as smart contracts can automate actions throughout a bond’s lifecycle, including coupon rate adjustments, if needed.

“As digital bonds enter a phase of widespread adoption, the cost of raising funds through bonds and other fixed income instruments will continue to decline, and companies that adopt the new technology will continue to decline. able to raise capital more efficiently. “

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