Today UBS announced its first digital bond, a CHF 375 million ($370m), 2.33% three-year unsecured bond that is entirely digital and issued on the SIX Digital Exchange (SDX) blockchain platform. However, it has a dual listing on both the main SIX exchange and SDX.
UBS is the first commercial bank to issue a digital bond that is listed, traded and settled on a regulated digital exchange. The bank is a member of the SDX alongside three other bank members Credit Suisse, Zürcher Kantonalbank and Berner Kantonalbank.
The promise of digital bonds is a more efficient issuance process, which should cut costs making smaller issuances viable. From an investor perspective, smaller minimum investments are possible, broadening access to a wider range of bondholders. The lifecycle of a digital bond is also easier to manage, with the ability to automate events such as coupon payments. Additionally, for secondary trading, the back office processes are streamlined because of a shared ledger that eliminates the need for reconciliations.
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