DBS prices first digital security offering at DDEx

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The $15m digital bond has a coupon rate of 0.6% per annum.

DBS has priced its first digital Security Token Offering (STO) at the DBS Digital Exchange (DDEx), according to an announcement.

The privately-placed S$15m digital bond comes with a six-month tenor and a coupon rate of 0.6% per annum. DBS serves as the sole bookrunner for the transaction.

Other issuers and clients can now tap on DDEx’s capabilities to access capital markets for their funding needs, the bank said in a press release. The move also paves the way for more STO issuances and listings on DDEx as asset tokenisation turns mainstream, DBS added.

To encourage broader participation from investors, the digital bond will be traded in board lots of S$10,000. This is a significantly smaller denomination compared to traditional wholesale bonds, which typically require investment and trading amounts in multiples of S$250,000.

This also highlights DDEx’s ability to offer tokenised assets for trading at much smaller denominations, which DBS said will help driving liquidity and lowering barriers to access for investors.

The Asia Pacific region currently accounts for nearly one-third of the global private equity market, according to a study by Bain & Co. It reached a record US$4.735 in 2020, data from Preqin revealed.

Eng-Kwok Seat Moey, group head of capital markets at DBS, noted in the press release that the asset digitalisation via the issuance of Security Tokens presents a tremendous opportunity for corporates seeking alternative platforms such as DDEx to raise funds from Asia-Pacific’s burgeoning private capital markets.

“Our maiden STO listing on the DBS Digital Exchange is a significant milestone, as it highlights the strength of our digital asset ecosystem in facilitating new ways of unlocking value for issuers and investors,” she said.

“We expect asset tokenisation to increasingly become more mainstream as more of our clients start to embrace security token issuance as part of their capital fund raising exercise which we believe will boost Singapore’s ambitions to be a digital asset hub in Asia,” Eng-Kwok added.

With the listing of the Digital Bonds on DDEx, the securities are now available for secondary trading among institutional and accredited investors who are either members or applicable end clients of members of DDEx.

The DBS Digital Bond strictly adheres to the current bond legal framework, thereby according investors the same legal certainties and protections over their rights as traditional bonds.