REC Limited, a state-owned lender to the power sector, has issued a ₹5 billion ($59 million) tokenized bond as part of a distributed ledger pilot and sandbox previously announced by the Securities and Exchange Board of India (SEBI). The company said the initial plan was for a ₹1 billion issuance, but after book building resulted in subscriptions of almost eight times the figure, it took advantage of the green shoe option to issue the full ₹5 billion. Some of India’s largest institutions invested in the bond, including HDFC Bank and ICICI Bank.
The 7.30% per annum bond has a tenor of one year and nine months. Bidding for the private placement took place on the National Stock Exchange’s (NSE’s) EBP platform, and the bond is listed on both NSE and the Bombay Stock Exchange (BSE). There’s a new type of securities account to reflect DLT holdings, a DEMAT 2.0 wallet provided by depositories, according to Reuters and the Business Standard.
There are two areas worth exploring more closely. Firstly, SEBI has always described the planned bonds as tokenized bonds rather than digitally native or digital bonds. That could simply be a turn of phrase, but it is worth exploring the legal requirements. Secondly, the bond settlement used India’s wholesale CBDC enabling delivery versus payment (DvP). But the question is DvP for whom? And also CBDC settlement for whom? Both the REC announcement and a much earlier comment from SEBI discuss CBDC-enabled or CBDC-based settlement mechanisms, something subtly different.
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