Swiss investment bank UBS AG unveiled its hybrid digital bond on Nov. 3, claiming it is the world’s first to be publicly traded and settled on both traditional and blockchain-based exchanges.
According to the bank, the digital bond has the same instrument structure, legal status and rating as a traditional UBS AG unsecured bond. In his statement, the bank said:
“Through this bond, UBS enables investors, regardless of whether they have the blockchain infrastructure, to invest in a digital bond. This removes a hurdle on the path to adopting a disruptive new technology that can make the issuance of bonds faster, more efficient and easier.”
The digital senior unsecured bond is a 375 million Swiss franc ($272 million) three-year bond with a 2.33% coupon, according to UBS. The bank will list the digital bond on SDX Trading and SIX Swiss Exchange. It will be eligible for the Swiss Bond Index, along with other UBS AG senior unsecured bonds.
With atomic settlement technology, the digital bond is settled through the central securities depository (CSD) based on the SIX Digital Exchange (SDX) distributed ledger, which is instant and automatic, and does not require a central clearing counterparty. . “Investors will have the ability to automatically settle and clear the UBS Digital Bond on the SDX CSD directly or on the SIX SIS,” the bank noted.
Beatriz Martín, Treasurer of the UBS Group, said that the initiative shows the investment bank’s commitment to support the development of new financial market infrastructure using technology “not only as an enabler, but to make it a true differentiator for UBS. “
UBS is digging into the cryptocurrency space following comments from the company’s CEO last year calling cryptocurrencies an “unproven asset category” and urged investors to be cautious during the bull market.
Last month, Another major traditional financial institution in Europe, Société Générale, has granted approval as a digital asset provider (DASP), allowing the French bank to offer custody and trading of digital assets through a subsidiary. The bank joined other international DASP operators such as Bitpanda, Binance, and Etoro.
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