Today BBVA Group announced it used its blockchain platform to negotiate the terms of a structured green bond. Spanish insurer MAPFRE invested €35 million for a six-year bond linked to the five-year euro swap rate.
A structured bond can have its return linked to any number of indicators, subject to agreement between the parties. For example, the return could be based on interest rates, exchange rates, an index or shares.
In this case, the bond is “green” because the funds are earmarked to finance green projects as part of BBVA’s sustainable development goals. DNV, the certification company involved in numerous blockchain projects categorized the bond as green.
José Luis Jiménez, Chief Investment Officer at MAPFRE, said this bond “contributes to the diversification of MAPFRE’s investment portfolio, and it does so with an innovative and sustainable product”.
From BBVA’s perspective Juan Garat, Head of Global Sales said that “using DLT – distributed ledger technology – for this transaction allowed us to simplify the processes and streamline the negotiation time frames.”
The platform enables the client to design their own bond with the aim of providing a self-service approach. The entire process is digital from negotiation to the issuing of bond documents.
The announcement didn’t mention technology, but based on past bond pilots the bank uses the permissioned Hyperledger Fabric blockchain and once the bond is issued a unique hash is registered on the public Ethereum testnet.
This is the latest evolution in BBVA‘s blockchain debt experiments starting with the Indra corporate loan in April last year:
|Apr 2018||corporate loan||€75m||Indra Minsait|
|June 2018||revolving credit||€325m||Repsol|
|July 2018||corporate loan||€100m||ACS|
|Nov 2018||syndicated loan||€150m||Red Electrica|
|Dec 2018||term loan||€150m||Porsche|
|Dec 2018||synthetic guarantee||€60m|| European
|Feb 2019||structured green bond||€35m||MAPFRE|