Japanese department store chain Marui (OIOI) has issued blockchain-based corporate bonds direct to its customers, sidestepping intermediaries, although Nomura acted as a financial adviser. The first issuance on June 20 was just over 120 million yen ($860,000). The original target was 100 million yen, but the issuance was 20 times oversubscribed. It’s about to release a second similarly sized tranche.
The corporate bond was unique in several ways, not just because it was direct or used distributed ledger (DLT). The proceeds of the one-year bond were for social purposes rather than for Marui’s internal use. That likely appeals to the company’s 25-30 year old target market.
The retailer worked in partnership with Gojo & Company, which targets financial inclusion and has $649 million in assets under management. In late June, Marui committed one billion yen that Gojo used for loans to Indian microfinance associates.
Marui sold the bond to its EPOS cardholders and offered a 1% one-year return. However, only 0.3% is in cash, with the balance provided as EPOS reward points enabled through tokenization.
Bondholders can’t re-sell the bonds, so they have to keep them until the one-year maturity.
Security token firm Securitize provided the platform used for the issuance. By digitizing the process and cutting out the middleman, the costs are significantly reduced. That means the bond can be issued in small denominations, which normally would not be economically viable. In this case, the non-cash return was also enabled through tokenization.
Security token issuance in Japan hasn’t yet reached take-off velocity but are happening regularly, especially for tokenized real estate. Apart from Securitize, the popular platforms used for security tokens are MUFG’s Progmat and Nomura’s BOOSTRY.