Based on Bloomberg, the European Investment Bank (EIB) has mandated Goldman Sachs, Santander and Société Générale to be joint lead managers for a €100 million bond issuance on the Ethereum blockchain.
The difficulty date is 28 April for the two-year AAA-rated bond that complies with French regulation and is focused at skilled purchasers. Two weeks ago, it was rumored that the bond was within the works.
Whereas Société Générale and Santander have each beforehand issued bonds on the general public Ethereum community, these bonds or security tokens have been purchased by related entities. In distinction, the EIB bonds are being bought to 3rd events, so it’s a a lot greater milestone.
The quantity matches the first Société Générale bond issuance, however the French financial institution adopted it up with a second bond for €40 million settled with a trial central financial institution digital forex. Santander’s bond was for €20 million.
Whereas at this time’s transaction is an enormous step ahead, it doesn’t absolutely exploit all the advantages of distributed ledger expertise (DLT). One of many benefits of blockchain is to digitize a nonetheless comparatively handbook bond issuance course of. One other profit is the potential to supply a blockchain shared registry with out a central securities depository (CSD), though the EU at present requires a CSD for securities issuance. The potential for prompt settlement or supply versus cost additionally removes counterparty threat. Nonetheless, on this case, cost is the following day (T+1).
Different government-related establishments which have adopted blockchain for bonds embrace the World Bank and retail treasury bonds issued by the banks of Thailand and the Philippines. Nonetheless, these all used permissioned blockchains.