News

UOB and ADDX collaborate on digital bond servicing

Bond market conceptSingapore-based United Overseas Bank (UOB) and digital securities exchange ADDX have announced the ‘digitisation’ of a sustainability-linked bond issued by local energy firm Sembcorp. According to the two firm’s the move is an industry first in Singapore as the demand for digital securities increases. UOB had been appointed as lead manager for a S$675 million (US$497 million) bond issued by Sembcorp and then partnered with ADDX in order to provide digital custody and administration for a $36.88 portion of the bond. According to Oi Yee Choo, chief commercial officer at ADX, digital securities have enjoyed a higher level of acceptance among blue-chip issuers of bonds over the last year. “Digital securities are in fact well-suited for this use case, because smart contract technology is designed to enable automated actions throughout the life cycle of a bond, including adjustments to the coupon rate, if needed,” she said. “As digital bonds enter a phase of widespread adoption, the cost of fundraising through bonds and other fixed income instruments will continue to fall, and companies that embrace the new technology will be able to raise capital more efficiently,” she added. © 2021 funds global asia

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