The Iberclear subsidiary of Bolsas Mercados Españoles (BME), along with Banco Bilbao Vizcaya Argentaria (BBVA) and the Inter-American Development Bank (IDB), have issued the first bonds in Spain to be listed on a regulated market and also registered using blockchain technology developed by the technological partner for the transaction, ioBuilders. This platform opens the door for similar bond issues in Spain and Latin America and the Caribbean.
Since February of this year, BME, BBVA, IDB and ioBuilders have been building this pioneering blockchain platform that can be used to register bonds issued on a regulated market, trade them on the secondary market and manage their life cycle. The operation used smart contracts to distribute, buy and sell, and settle bonds, as well as for corporate events, with electronic money tokenized by BBVA for managing cash over the life of the bonds.
This project was led and managed by BME and its IT partner ioBuilders, in partnership with LACChain, an IDB initiative that aims to accelerate use of blockchain technology to promote development. The alliance will allow BBVA to export the technology to Latin America, where access to alternative project finance is more limited. Garrigues was bond counsel for the transaction.
In addition to tokenizing digital money, BBVA played the critical roles of digital custodian, digital structurer and active bookrunner in this transaction. Citi was the agent, while Iberdrola and Renta 4 invested in the bonds.
Jesús Benito, CEO of BME subsidiary Iberclear, explained that "this issue is further proof of the innovative spirit of BME, which constantly seeks improvements through technologies such as blockchain in order to remain at the fore of digitalizing and modernizing the financial market.”
With this issue, BBVA builds its strategy for digital assets in financial markets through real and live transactions. Regina Gil, Head of Global Credit at BBVA, said, "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 issue costs and time, which opens up opportunities for smaller issuers and less-developed economies."
Irene Arias Hofman, CEO of IDB Lab, the IDB’s innovation arm, commented that: "In addition to its technological novelty, this type of bond could lead to major social and economic transformation. In fact, we expect it to cut down on issue frictions and costs so significantly that it could cause capital markets to expand, making them accessible to small investors. For the IDB Group, it also lays the groundwork for future developments to finance green investments, female entrepreneurs and projects with a highly strategic social impact."
Gustavo De Rosa, Vice President for Finance and Administration and CFO of IDB, stated: "We are very pleased to participate as an issuer in this pilot project, and we are grateful to BME, BBVA and ioBuilders. At the bank's Treasury Division, we are constantly striving to 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 this technology’s potential in terms of transparency, programmability and redundancy in financial transactions.”
This groundbreaking blockchain-based bond issue fits into the strategy of shaping the future market infrastructures pursued by SIX Group, BME’s parent company. The project underscores BME's commitment to developing new blockchain-based solutions for investors that streamline processes and meet the same standards for control, transparency and security 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 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 the 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.
ioBuilders is a global company devoted to developing 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’s team of 100 professionals includes technical experts 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.
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. For more information visit www.citigroup.com