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India to launch first tokenized corporate bond in September via pilot
The $57 million issue from state-owned REC will use a central bank digital currency pilot, with investors needing both a wholesale digital-currency wallet and an electronic securities wallet.
India is preparing to launch its first tokenized corporate bond in September, using blockchain to address longstanding liquidity and manual processing issues in the local bond market, according to Yahoo Finance.
The issuer is state-owned power financier REC, a public sector company that finances and promotes power projects. REC plans to raise $57 million through the tokenized corporate bond, with the Securities and Exchange Board of India, or SEBI, working alongside the central bank on the technology.
SEBI and the central bank will run the effort as a pilot, with central bank digital currency used to purchase the bonds. To participate, investors will need two digital accounts: a wholesale digital-currency wallet issued by a bank, and a new electronic securities wallet, with the latter still being developed.
The pilot targets structural problems in India’s corporate bond market, which is estimated at roughly $617 billion, about 16% of GDP. Yahoo Finance notes that limited liquidity in the secondary market has contributed to heavy reliance on private placements, while tokenization is pitched as a way to speed settlement by using a shared ledger rather than traditional multi-day, multi-intermediary processing.
Yahoo Finance also points out that the issuance size is consistent with earlier market tests, citing digital bond deals in Europe and Asia, including Siemens’ €360 million digital bonds and South Korea’s POSCO International $100 million digital bond in Hong Kong.