Today Cashlink published a report in conjunction with FinPlanet quantifying the cost savings from tokenized bonds. Cashlink is the most prolific registrar for tokenized bonds in Germany, where there have been quite a few issuances. As the sector matures by 2028, it estimates the cost savings on an eight year bond could be 120 basis points or 1.2% of the value of the bond. Hence, using DLT represents an 85% reduction in middle and back office costs.
Spread over an eight year bond duration, the 120 basis point savings represents 15 basis points per year or €15 million on every €10 billion in assets under custody.
However, there are a few critical assumptions. These massive savings apply to a German bond issuer where investors are in another EU jurisdiction. If the target investor is within Germany, the 2028 savings are still 52 basis points or 0.52%, representing a 71% reduction versus TradFi costs.
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