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German industrial giant Siemens has issued its first digital bond on public blockchain.
The bond has a face value of €60 million and a maturity of one year.
Blockchain allows bonds to be sold directly to investors and makes paper global certificates and central clearing unnecessary, the German industrial giant said Tuesday.
In all, we see that Siemens shares were marginally down Tuesday morning.
Siemens and the digital bond on blockchain: all the details
Siemens is one of the first companies in Germany to issue a digital bond in accordance with the German Electronic Securities Act (Gesetz über elektronische Wertpapiere, eWpG). German company is a pioneer in the ongoing digital transformation of capital and securities markets.
The news is also reported by Blockworks‘ official Twitter account, which reads:
NEW: German industry giant Siemens issues its first digital bond on blockchain.
The bond has a volume of €60 million and a maturity of 1 year. pic.twitter.com/z05mjjLCXa
— Blockworks (@Blockworks_) February 14, 2023
As anticipated, in addition to the fact that the bond has a volume of €60 million and a maturity of one year, classic payment can be made via bank account.
Issuing the bond on a blockchain offers a number of advantages over previous processes. For example, it makes paper global certificates and central clearing unnecessary. In addition, the bond can be sold directly to investors without the need for a bank to act as an intermediary.
Ralf P. Thomas, Chief Financial Officer of Siemens AG, said the following about this:
“With our innovative products and technologies, Siemens supports the digital transformation of its customers very successfully. It therefore makes sense that we also test and use the latest digital solutions in finance. We are proud to be one of the first German companies to successfully issue a blockchain-based bond. This makes Siemens a pioneer in the continuous development of digital solutions for the capital and securities markets.”
How Siemens issued its first bond on blockchain
As we know, it has been possible to issue blockchain-based digital bonds in Germany since the Electronic Securities Act went into effect in June 2021.
Siemens used the new possibilities of the Electronic Securities Act in this regard and sold the bonds directly to investors without involving central securities depositories.
Payments were made by classical methods since the digital euro was not yet available at the time of the transaction. Nonetheless, the latter was completed in two days.
Peter Rathgeb, Corporate Treasurer at Siemens AG, said about this:
“By moving away from paper and moving to public blockchains for bond issuance, we can transact in ways that would be faster and more efficient than when issuing bonds in the past. Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital titles in Germany.”
Therefore, Siemens is actively leading their ongoing development. Hauck Aufhäuser Lampe Privatbank AG acted as bond registrar for the transaction. DekaBank, DZ Bank, and Union Investment invested in the bond.
EIB: its digital bond on blockchain available from November 2022
The European Investment Bank (EIB), in partnership with Goldman Sachs Bank Europe, Santander and Société Générale, launched Project Venus last November. Project Venus is their second euro-denominated digital native bond issue and the first using Goldman Sachs‘ private blockchain technology.
In fact, the two-year €100 million bond represents the inaugural issue on Goldman Sachs’ tokenization platform, called GS Daptm. The digital bond was issued, registered and settled all using this private blockchain-based technology.
The Banque de France and Banque centrale du Luxembourg participated in the project by providing a digital representation of central bank money in euros in the form of tokens. Société Générale Luxembourg and Goldman Sachs Bank Europe SE acted as on-chain custodians.
The Venus project consists of the EIB issuing a series of bonds on a blockchain, in which investors purchased and paid for security tokens using traditional currency.
The project’s co-leaders, Goldman Sachs Bank Europe SE, Santander and Société Générale, settled the subscription against the issuer using a representation of the central bank digital currency, or CBDC.