The bank OCBC has launched bespoke tokenized bonds for corporate accredited investors.
A bank in Singapore, OCBC, has scored a first with the launch of bespoke tokenized bonds to corporate accredited investors, a major step forward for Singapore’s efforts to promote the usage of tokenized assets.
“The tokenized bonds, which reference investment grade bonds, are structured based on the client’s desired tenor and yield. They are then minted and transferred to the client’s wallet created on OCBC’s asset tokenization platform,” according to officials at Overseas Chinese Banking Corp. (OCBC).
In this case, the transaction “was settled within the same business day from the debiting of the client’s bank account to the transferring of digital tokens from OCBC to the client’s wallet which is custodized with OCBC. Traditional bond transactions usually take five days for settlement. This was the client’s first usage of tokenized assets,” according to OCBC.
The corporate accredited investors for this offering “are corporations that have net assets exceeding S$10 million,” officials add. The launch is “the second commercial use case using OCBC’s blockchain infrastructure” developed in 2022.
“Corporate bonds usually have a high minimum transaction size of S$250,000, which could contribute to concentration risk. Tokenization addresses this as it enables fractional ownership – a corporate AI client can subscribe to tokens at S$1,000 denominations. This in turn facilitates the building of more diversified portfolios with a range of assets. Clients can similarly liquidate investments in S$1,000 denominations to meet cashflow requirements,” officials say.
The OCBC asset tokenization capability “streamlines the entire lifecycle from creation and minting to ownership transfers and custody, and redemption through token burning” will extend beyond fixed income assets, according to OCBC. “This will enable OCBC to tokenize a range of assets for its clients, including structured products and funds.”
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