- J McGlynn and M Bacina
German real estate group uses Stellar blockchain to issue $24M bond
Updated: Jan 25, 2021
Recently Vonovia, a major European real estate group, issued a EUR20 million (AUD 24 million) bond using the Stellar blockchain. Vonovia says the blockchain-powered bond has a three-year term and uses security tokens for the transfer of real estate rights. The issuance was a collaboration with Firstwise, a Germany-based online marketplace.
Why blockchain bonds?
By using the blockchain technology for the transfer of real estate rights, Vonovia plans to make the issuance of real estate rights more efficient. Chief Financial Officer at Vonovia, Helene von Roeder, said blockchain-powered bond digitization has enabled the company to finance themselves:
faster, easier and cheaper.
Blockchain bonds (or digital bonds) are like regular bonds, but faster and easier to use given the absence of paper and trading on an censorship resistant ledger, allowing near instant and reliable settlement and removing delays normally seen with traditional bond settlement. The issuance is said to be part of efforts to “further expand the digitalization of the financial sector”.
Joachim Olearius, spokesman for the first investors in the bond agrees, saying:
Tokenization will significantly expand and structurally change the range of financial products and services.
Not the first cab off the rank - The bond-i platform
But Vonovia isn't the first to use Blockchain for a bond issuance. In August 2018, the World Bank and Commonwealth Bank of Australia (Commbank) successfully launched project bond-i (blockchain operated new debt instrument) which Commbank claimed was:
the world's first bond to be created, allocated, transferred and managed through its life cycle using blockchain technology.
Commbank similarly cited automation, efficiency, transparency, security, risk mitigation and productivity as key benefits of using a blockchain bond.
Both Australia and Germany are countries that continue to push for digital transformation using Blockchain to modernize outdated and slow financial technology. Which country will be next to start experimenting in their bond issuance?