Singapore’s second biggest financial institution, OCBC Bank, has decided to introduce a new solution that makes use of blockchain and allows corporate investors to take fractional shares of their bonds.
The aim of the bonds issued through tokenization is to encourage investment in private companies that have earned at least S$10 million. It was said in the press release that these investors are now able to purchase bonds worth S$1,000, whereas S$250,000 is the lowest amount that can be invested in traditional bonds.
Furthermore, these bonds are created according to the investors’ desired tenor and interest rates, which improve flexibility and stability. Corporate clients at OCBC can now alter the composition of their bonds while selling smaller denominations when cash is required.
This new product was first used by a medium-sized construction company looking to diversify its treasury investments away from fixed deposits.
The bonds are pegged to currently available investment-grade bonds and the transaction settlement takes place on the same day, unlike the usual five-day settlement period for traditional bonds. This fast-tracked settlement process is one of the most critical benefits of tokenized bonds.
Kenneth Lai, the Head of Global Markets at OCBC, said “This innovation provides flexible and liquid investment alternatives, bringing tangible benefits to our customers.”
The bank’s tokenization platform, set up in 2022, supported the minting of the bonds and their subsequent allocation to the investor’s wallet. OCBC will look to expand its services to include other types of tokenized assets.
Apart from tokenized bond development, OCBC has also been exploring blockchain applications for other financial services. In 2024, the bank worked with Singapore’s Land Transport Authority (LTA) to develop a blockchain-based conditional payment solution for construction projects. The system automatically releases payments when pre-agreed conditions are met.
