HSBC Orion tokenizes commercial bank money and sterling bonds
New platform acts as central account keeper under Luxembourg law for first ever sterling bond deal on blockchain.
On February 2, the European Investment Bank (EIB) and lead banks BNP Paribas, HSBC and RBC, settled the first ever sterling bond new issue on blockchain: a £50 million, three-year, floating-rate note, priced at 12 basis points over Sonia (the Sterling Overnight Index Average) and allocated to institutional investors and bank treasuries.
The debt capital markets did not tremble at the news: in fact, they scarcely noticed.
Frequent borrowers and their banks have been talking portentously about faster, cheaper, more efficient new issues of tokenized securities transforming primary and secondary capital markets since late 2015 and experimenting with them since 2018.
Eight years on from the first rush of enthusiasm, blockchain teams are little closer to delivering that much-promised great leap forward into a world of digital assets with instant delivery versus payment, either on private permissioned blockchains or on public ones.
These are digital native bonds issued on blockchain. They are not a tokenized representation of an asset that really sits somewhere else
A handful of tiny deals launched on distributed-ledger technology (DLT) infrastructure and then barely ever traded, remaining irrelevant next to the trillions of dollars' and euros' worth still trucking along the traditional rails.