Singapore’s DBS Bank launches digital bond security token

Institutional or accredited investors signed up to the DBS Digital Exchange will be able to access secondary markets for DBS’s digital bond.

Singapore-based multinational banking corporation DBS Bank has launched its first-ever security token offering by issuing a digital bond.

The DBS digital bond has been priced at $11.35 million and comes with a six-month tenor and coupon rate of 0.60% annually. The offering was carried out through a private placement hosted by DBS Digital Exchange, or DDEx, marking DDEx’s first STO.

To encourage investor engagement, the bond is set to be traded in board lots of 10,000 Singapore dollars (roughly $7,560) — a dramatic reduction compared to the 250,000 Singapore dollar board lots that traditional wholesale bonds are traded in.

The digital bonds will be available for secondary trading to clients of DDEx who are accredited or institutional investors.

DBS hopes its offering will pave the way for other issuers to launch security token offerings via the DDEx platform.

Eng-Kwok Seat Moey, the group head of capital markets at DBS, emphasized that security tokens offer an efficient and innovative method for raising capital in the Asia-Pacific region, which currently represents more than 30% of the global private equity markets. He stated:

“Our maiden STO listing on the DBS Digital Exchange is a significant milestone, as it highlights the strength of our digital asset ecosystem in facilitating new ways of unlocking value for issuers and investors. We expect asset tokenisation to increasingly become more mainstream as more of our clients start to embrace security token issuance as part of their capital fund raising.”

Since launching in December 2020, Moey estimates daily volumes on DDEx have increased by 900%, with the platform now servicing more than 120 traders. DBS’ crypto custody service also holds more than $60 million in assets.

The bank also launched a trust structure offering investment management services for Bitcoin (BTC), Ether (ETH), XRP and Bitcoin Cash (BCH) speculators in early May.