Societe Generale Group, a leading French lender, has reportedly issued a $112 million bond via a security token offered on the Ethereum blockchain.
The financial provider announced the development on Tuesday, April 23, noting that its subsidiary Societe Generale SFH issued the security token bond labeled OFH.
The company’s OFH (obligations de financement de l’habitat) token represented 100 million euros in what is called covered bonds. The issuance falls within a category of security tokens that are ostensibly backed by given assets, and remain as part of the company’s accounting books.
On the same day the French lender announced its covered bond token, a rating agency issued a statement revealing that Societe Generale participated in the issuance as a “sole investor.”
According to Moody’s Investors Service, the financial company issued all the security tokens to itself.
Moody’s also announced that the SFH bond comes with a five-year maturity period that can be extended by a further 12 months. The offering is also pari passu, Latin for “equal footing,” which means that it is rated the same as other covered bonds the issuer provides.
Simply put, it means that if the French company were to go down, then token holders would benefit from equal payouts as other regular bond investors.
Moody’s also rated the company’s move to use blockchain technology as “credit positive,” pointing out transparency, reduced chances of errors as well as cutting intermediaries as some of the advantages the budding technology has over legacy covered bonds.
The project pilot is a design of Societe Generale FORGE, a subsidiary of the company that makes up one of the numerous startups in its intrapreneurial programme. The project received tech advice from PwC, while Gide Loyrette provided legal services.
According to the firm, the “live transaction” provides insight into the efficiency with which bonds can be issued over the blockchain.
The firm added that the technology provides a lot of value, including product scalability, better transparency, and faster transaction settlement and value transferability.
It isn’t the first time Societe Generale has participated in an enterprise blockchain project, having been a founding member we.trade- a trading platform that launched in 2017 and used IBM technology.
The Group also participated in the launch of the Komgo SA commodity trading platform that launched last year.
This April saw the company’s private bank Kleinwort Hambros launch its exchange-traded note (ETN), stating that the target was to invest in blockchain companies.
Elsewhere, blockchain continues to gain massive traction across the globe. The Austrian government officials last September announced the launch of a pilot project that they noted would leverage Ethereum’s blockchain to notarize a $1.3 billion bond that was to be auctioned.
In November, major Spanish bank BBVA announced it had completed a $150 million syndicated loan offered via the Ethereum blockchain.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.
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