tl;dr
Digital bonds surged 260% in 2024, reaching €3 billion ($3.14 billion), with Europe and Asia leading the market. European entities issued €1.7 billion ($1.77 billion) worth of bonds on Distributed Ledger Technology (DLT), while Asia contributed €1.1 billion ($1.15 billion). The report, published by ...
Digital bonds surged 260% in 2024, reaching €3 billion ($3.14 billion), with Europe and Asia leading the market. European entities issued €1.7 billion ($1.77 billion) worth of bonds on Distributed Ledger Technology (DLT), while Asia contributed €1.1 billion ($1.15 billion).
Toyota Financial Services is set to issue a digital bond in March, targeting both professional and retail investors. The bond will be issued on Progmat, a DLT platform founded by Japan’s largest bank, MUFG.
The AFME report has sparked a debate about the scope of DLT bonds, with projections indicating steady growth in the sector.
The report also highlighted the involvement of the European Central Bank (ECB) and the Swiss National Bank (SNB) in DLT trials that issued €1.8 billion ($1.88 billion) worth of digital bonds. Notable issuances included a €105 million ($109 million) digital bond by the European Investment Bank and a €100 million issuance by France’s state-owned lender.
Asia, particularly Hong Kong, has also been active in the digital bonds market, with HSBC dominating the Asian market.
Toyota Financial Services, the financial arm of the Japanese automotive giant, is set to issue a digital bond in March. The bond, worth one billion yen ($6.5 million) with a one-year maturity, will be accessible to professional and retail investors.
The AFME report sparked an ongoing debate about the scope of DLT bonds, mainly focusing on the involvement of a central securities depository (CSD) in the issuances.
The Association only considered bonds whose issuances didn’t involve a central securities depository (CSD), ignoring whether DLT was used in other aspects. For instance, in June last year, Germany’s KfW Bank issued a €4 billion ($4.28 billion) digital bond on Clearstream, a post-trade platform owned by Deutsche Borse. The bond relied on a centralized ledger for the issuance, although it tapped DLT and smart contracts for aspects such as settlement.
AFME projects the sector will grow steadily over the next few years, anticipating a continued increase in the DLT-based issuance of securities.