BME, through Iberclear, BBVA and the Interamerican Development Bank (IDB), have completed the first bond issuance in Spain listed in a regulated market and registered using blockchain technology developed by ioBuilders. This platform could serve as a basis for future issuances in Spain and in Latin America and the Caribbean.
Since February of this year BME, BBVA, IDB, and ioBuilders have been working on this pioneering project, whereby the development of a blockchain platform allows the registration, trading in the secondary market and life cycle management of a bond issued in a regulated market. Smart contracts have been used for the execution of the distribution, purchase and sale, settlement and corporate events processes, using electronic money tokenized by BBVA for the management of cash throughout the term of the issuance.
This project for the development of the blockchain platform has been led and managed by BME and its IT partner ioBuilders, in alliance with LACChain, an initiative promoted by IDB that aims to accelerate the use of blockchain technology to promote development. This will allow BBVA to export the technology to the Latam region, where access to alternative project finance is more limited.
In addition to its role as tokenizer of digital money, BBVA has taken on several critical roles, acting as digital custodian, digital structurer and active bookrunner for the transaction. Citi has acted as agent. Iberdrola and Renta 4 have acted as investors in the bond.
Jesús Benito, CEO of Iberclear, explains that "this issue is further proof of the innovative spirit of BME, which is constantly seeking improvements through technologies such as blockchain, in order to continue playing a leading role in the digitalization and modernization of the financial market".
With this issuance, BBVA builds its digital asset strategy in the financial markets based on real and live transactions. Regina Gil, Head of Global Credit at BBVA, explains: "We wanted to evaluate whether blockchain transactions can be executed with the current market infrastructure in terms of trades and system interconnectivity for underwriters and institutional investors. This pilot reduces the issuance cost and time, which opens up opportunities for smaller issuers and less developed economies."
Irene Arias Hofman, CEO of IDB Lab, points out that: "Beyond the technological aspects, the creation of this bond could have a very strong transformational economic and social impact. In fact, we expect it to bring about such significant reductions in issuance frictions and costs that they could lead to an expansion of capital markets, making them accessible to small investors. For the IDB Group it is also a basis for future developments to finance green investments, women's entrepreneurship and social impact of high strategic interest".
Gustavo De Rosa, Vice President of Finance and Administration, for Finance and CFO of IDB, states: "We are very pleased to participate as an issuer in this pilot project and thanks BME, BBVA and ioBuilders for this. Through the Bank's Treasury division, we seek to continuously innovate, by exploring new financial instruments and services that advance the social and economic development agenda of our member countries. The rapid growth we have seen in the use of blockchain technology and smart contracts is proof of the potential of this technology in terms of transparency, programmability and redundancy in financial transactions”.
The first issuance of a blockchain-based bond is part of the strategy of the SIX group, to which BME belongs, of shaping the future market infrastructures. This project reaffirms BME's commitment to developing new blockchain-based solutions aimed for investors, ones which streamline processes and maintain the same control, transparency and security standards as regulated financial markets.
BME, a SIX Group company, is the operator of all securities markets and financial systems in Spain. Since its inception, the Group has been a benchmark in the sector in terms of solvency, efficiency and profitability. BME offers a wide range of products, services and trading systems based on stable and advanced technology developed in-house. It also offers access to global markets to issuers, intermediaries and investors both in Spain and internationally, with clients in Europe, America and Africa. Its activity is divided into six business areas: Equities, Fixed Income, Derivatives, Clearing, Clearing and Settlement and Market Data and Value Added Services.
About BBVA Corporate & Investment Banking
BBVA Corporate & Investment Banking (BBVA CIB) brings together investment banking, markets, financing and transactional services for institutional investors and corporate clients. BBVA's wholesale banking division has a strong global presence, providing services in 24 countries through an extensive team of experts, including investment banking specialists and advisors in specific industries and sectors. BBVA CIB offers a wide range of value-added financial products and solutions for both simple and complex needs. Its mission is to help clients carry out their projects and achieve their business, transformation and sustainability objectives, whether at local or international level.
About IDB Group
IDB Group BID is the leading source of development finance for Latin America and the Caribbean. It helps improve lives by providing financial solutions and development expertise to public and private sectors clients. The Group comprises the IDB, which has worked with governments for more than 60 years; BID Invest, which serves the private sector; and BID Lab, which test innovative ways to enable more inclusive growth. Access our virtual tour.
LACChain is a global alliance made up of different actors in the blockchain environment, led by IDB Lab, the IDB Group’s Innovation Lab for the development of the blockchain ecosystem in Latin America and the Caribbean.
Its goal is to accelerate the implementation and adoption of blockchain technology in the region to promote innovation that reduces inequalities and promotes job quality and security, financial inclusion, consumer protection and market integrity. Focusing on the basic pillars of community and infrastructure, LACChain already works with ecosystems in 15 countries and has enabled blockchain networks used by more than 100 entities in over 60 projects.
Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 160 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.
Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi
ioBuilders is a global company in the development of blockchain-based solutions for financial institutions and corporations. It specializes in digital asset tokenization solutions such as bonds, funds, equities, syndicated loans, or NFTs, as well as fiat money tokenization. Today, ioBuilders has a team of 100 professionals combining technical experts (mainly) in the development of blockchain-based solutions, experts in financial business and capital markets, and legal experts. Its mission is to help institutions and corporations to adopt this technology in their processes and business.