- SGX’s digital asset issuance, depository and servicing platform was used to launch and settle in parallel, the first digital bond issuance for Olam International

- This marks the first step towards wider use of smart contracts and distributed ledger technology (DLT) for the Asian bond market

Singapore Exchange (SGX), working together with HSBC Singapore and Temasek, has

completed its first digital bond issuance on SGX’s digital asset issuance, depository and

servicing platform, successfully replicating a S$400 million 5.5-year public bond issue and a

follow-on S$100 million tap of the same issue by Olam International. 

An Asia first for a syndicated public corporate bond, this digital bond marks another milestone in

SGX’s use of digital asset technology, by streamlining processes for issuers, underwriters,

investors and ecosystem participants across primary issuance and asset servicing.

SGX utilised DAML, the smart contract language created by Digital Asset, to model the bond

and its distributed workflows for issuance and asset servicing over the bond’s lifecycle. SGX’s

solution uses smart contracts to capture the rights and obligations of parties involved in

issuance and asset servicing, such as arrangers, depository agents, legal counsel and

custodians. 

The digital bond used HSBC’s on-chain payments solution which allows for seamless settlement

in multiple currencies to facilitate transfer of proceeds between the issuer, arranger and investor

custodian.

Key efficiencies observed within the pilot include timely ISIN (identifier) generation, elimination

of settlement risk (for issuer, arranger and investors), reduction in primary issuance settlement

(from 5 days to 2 days) as well as automation of coupon and redemption payments and registrar

functionality. For more information, please visit this webpage. 

Building on this digital issuance, SGX will work with issuers, arrangers, custodian banks and

investors to digitalise bond issuance, depository and asset servicing, progressively growing the

fixed income ecosystem.

Lee Beng Hong, Senior Managing Director, Head of Fixed Income, Currencies and Commodities

(FICC), SGX, said, “We are very excited that this collaboration with HSBC and Temasek has led

to the successful completion of the first digital syndicated public corporate bond in Asia. Debt

capital markets globally are characterised by deeply engrained legacy systems and processes

which can be made faster, more accurate and efficient with this new technology. DLT and smart

contracts are rapidly evolving technologies, and our vision is to fully digitalise the end-to-end

corporate bond issuance and asset servicing process. We look forward to playing a part in

strengthening the fixed income market infrastructure of Singapore, Asia’s fixed income hub for

bond issuers.” 

David Koh, Head of Global Liquidity and Cash Management, HSBC Singapore, said, “We’re

proud to be working closely with SGX and Temasek to drive faster, more transparent, and fully

secure settlements for bond issuers and investors. This first digital bond issuance for Olam

International shows how our on-chain solution can fulfil payment needs in DLT-based

ecosystems, and demonstrates our desire to shape and participate in the next generation of

asset networks, to better service our securities services clients. We look forward to bringing this

technology to our clients in Singapore and beyond.”

Chia Song Hwee, Deputy Chief Executive Officer at Temasek, added, “Innovative technologies

such as blockchain technology are key enablers that can transform processes and systems to

create game-changing opportunities. We are pleased to have partnered SGX, HSBC and Olam

in this initiative. The successful bond issuance validates the potential for issuances of other

assets and products, and marks an important milestone towards improving financial processes

and workflows.”

N Muthukumar, Managing Director and Group CFO of Olam International, said, “Olam is

delighted to pilot Asia’s first digital bond in close partnership with SGX, Temasek and HSBC.

Going digital will make the entire process more efficient and transparent for all parties – issuers

like us receive our funds more speedily, investors get their bonds more quickly while the

arrangers, custodian and banks benefit from the reduced probability of error and speed. This is

in line with Olam’s focused push into digitalisation as part of our refreshed strategy, to grow

sustainably and live our purpose of re-imagining global agriculture and food systems.”

“The bond market is one of the last bastions of risk, holding on to paper and manual processes,”

said Yuval Rooz, Co-founder and CEO, Digital Asset. “Despite the growth in electronic bond

trading, there are still many aspects that require manual intervention. SGX’s DAML smart

contract solution solves a major pain point market participants have been working to fix for

years. We look forward to our continued work with SGX as they move to digitise the end-to-end

bond issuance process.”