European real estate company Vonovia has issued a €20 million digital bond on the Stellar blockchain in partnership with firstwire, a web-based marketplace for debt financing, and Bitbond, Germany’s tokenisation and digital asset custody technology provider.
Vonovia said that the digital bond with a three year term was part of its strategy to digitise its finance division.
Vonovia had already used the platform, which brings issuers and investors together directly and in real time, to place a promissory note of € 50 million in September 2019.
The real estate firm said that security tokens following the strictest security standards were used for the transfer of ownership of the bond.
On the investor side, the tokens offer new perspectives for the banks and their customers.
According to Joachim Olearius who is a spokesperson for the partners of the owner-operated M. M. Warburg & Co., “tokenisation will significantly expand and structurally change the range of financial products and services”. M. M. Warburg & Co. had conducted this transaction.
This move comes amidst the announcement in mid-December that the German cabinet approved a bill introducing electronic securities. The bill aims to drive the digitalisation of the German financial marketplace and fulfill a key requirement of the German government’s blockchain strategy for greater transparency, market integrity and investor protection.
“Digitalisation provides us with the opportunity to finance ourselves faster, more easily and more cost efficiently. We want to test out the new technology to gain experience with it.
It’s easy to imagine that it will play a significant role in the capital market in the future. Issuances are transparent and traceable in real time, which guarantees a professional transaction standard. Additionally, we can use it to approach new investors around the globe.”
said Helene von Roeder, Chief Financial Officer of Vonovia.
Michael Dreiner, CEO and founder of the online marketplace firstwire, values the transaction as a milestone because, it introduces the use of tokens to the institutional capital market and has the potential to change bond markets considerably.
“In light of the planned legislation of electronic securities, this transaction demonstrates how bond issuances can be conducted in the future. On firstwire, companies can now conclude their transactions digitally and in real time, meaning instant settlement and no multi-day settlement risk anymore.”
Featured image credit: Vonovia
