According to Coindesk's April 23 report, the financial services giant, the Societe Generale Group, issued a $112 million Ethereum blockchain bond in the form of a securities token.
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The bank's subsidiary, Societe Generale SFH, uses OFH tokens to represent 100 million euros of guaranteed bonds, which are backed by specific assets but are still included in the issuer's balance sheet.
However, according to a report issued by the bond rating agency Moody's Investors Service, Societe Generale is the “sole investor”, which means that the company issues securities to itself without the participation of external buyers.
Moody's said the bond is a five-year period with a 12-month extension. The report pointed out that the bond has the same rights as other guaranteed bonds issued by Industrial Bank. That is to say, if the company goes bankrupt, no matter who holds the token at that time, it will receive the same partial payment together with the ordinary bondholders.
Moody's believes that for Industrial Bank, the bond rating using the blockchain technology is “positive” because the blockchain has increased transparency and reduced the number of intermediaries used to issue guaranteed bonds in the traditional way. And the possibility of error caused by complexity.
The pilot project was designed by Societe Generale FORGE, a blockchain company of Société Générale, which is one of the 60 startups in the group's internal entrepreneurship program.
Industrial Bank said that PricewaterhouseCoopers provided technical advice for the project and French Kidd Law Firm acted as legal counsel.
Societe Generale said in a press release:
We explore a more efficient bond issuance process in this real-time transaction. We explored many value-added areas such as product scalability, reduced release times, and computer code automation structures to increase transparency and speed up transfer and settlement. Blockchain technology proposes new standards for bond issuance and secondary market bond trading, reducing costs and the number of intermediaries.
Societe Generale has been involved in many blockchain projects. In 2017, it joined the IBM-backed trade finance platform we.trade as a founding member; likewise, in 2018 it was the first founding member to join the commodity trading platform Komgo SA.
This month, Kleinwort Hambros, a private banking and wealth management company owned by Societe Generale, launched an exchange-traded instrument (ETN) for the blockchain industry.