Societe Generale Subsidiary Issues $112 Million Covered Bond As Security Token on Ethereum Blockchain
Societe Generale SFH, a subsidiary of Societe Generale Group, issued covered bonds worth $112 million (€100 million) on the public Ethereum blockchain. The bonds have been issued as a security token.
The bank hopes the transaction will help to improve transparency and efficiency of bond issuances.
According to the announcement,
“This live transaction explores a more efficient process for bond issuances. Many areas of added value are predicted, among which, product scalability and reduced time to market, computer code automation structuring, thus better transparency, faster transferability and settlement. It proposes a new standard for issuances and secondary market bond trading and reduces cost and the number of intermediaries.”
Covered bonds are debt securities issued by a financial institution and then backed by a separate pool of assets. The backing makes covered bonds more secure against insolvency of the financial institution.
Ratings agency Moody’s and Fitch gave the tokens a AAA rating. Societe Generale was the sole investor and the tokens were not sold outside of the company.
The initiative is part of the bank’s experimentation with blockchain projects. It is the first pilot with Societe Generale FORGE, one of its many internal startups developing digital capital market solutions. The French bank is currently working with 60 internal startups to enable the growth of disruptive intrapreneurial projects.
Its London-based subsidiary, Kleinwort Hambros, launched a blockchain exchange-traded note (ETN) earlier in the year. The ETN is designed to give clients the opportunity to invest in stocks of blockchain-related companies from four major sectors: technology, custody banking, industrials and shipping/oil/gas.