Siemens is also keen on being the pioneer of the ongoing digital transformation in the capital and securities markets.
German technology giant Siemens (SIE) has issued its first digital bond on the Polygon blockchain. According to a press release, the $64 million bond has a maturity of one year and was issued in line with the German Electronic Securities Act. Recall that the Electronic Securities Act became effective in June 2021.
Per the February 14 release, the blockchain bond makes it so that there’s no need for “paper-based global certificates and central clearing.” Essentially, this means that the bond may be sold directly to investors such as DZ Bank, DekaBank, and Union Investment. The statement read in part:
“What’s more, the bond can be sold directly to investors without needing a bank to function as an intermediary.”
Furthermore, Siemens also highlighted other benefits that digital bonds bring as opposed to what’s obtainable with traditional bond-issuing methods. For instance, the process ensures that transactions are executed considerably faster and more efficiently than those achieved with previous methods.
Other German companies that have issued digital bonds on blockchain technology can be seen here.
Siemens Forays Deeper Into Blockchain Technology
It might be worth noting that this sale is not the first time Siemens will be experimenting with blockchain technology. In July 2019, Siemens was considering using blockchain technology for a carsharing program through one of its arms – Siemens Mobility. In October 2020, it was also reported that Siemens-backed energy trading platform Pebbles held a virtual demo of its marketplace. Again, in December 2021, the technology giant partnered with JPMorgan Chase to develop a blockchain-backed payments system.
But, while it continues to explore the world of blockchain technology, Siemens is also keen on being the pioneer of the ongoing digital transformation in the capital and securities markets. To put that into perspective, Siemens corporate treasurer Peter Rathgeb says:
“Thanks to our successful cooperation with our project partners, we have reached an important milestone in the development of digital securities in Germany.”
More blockchain news can be found here.
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German tech giant Siemens is making history as it issues the world’s first bond on a public blockchain. The bond, which is a €100 million ($110 million) series of 5-year bonds, will be jointly offered by Germany’s leading state-owned development bank, KfW and Goldman Sachs International, who are both acting as joint lead managers.
Siemens, a leading manufacturer of electrical engineering and electronics, will be the first company to take advantage of the impressive features that blockchain technology offers. Specifically, the digital bond offering will exploit blockchain’s ability to significantly reduce the transactions costs associated with traditional financial transactions like bond sales.
The technology is expected to facilitate a faster and cheaper bond issuance, settlement and maintenance process. Aside from those benefits, the use of blockchain should allow for more efficient communication and more transparent tracking of data between all the involved parties.
In addition to this, the use of blockchain will also provide investors with an easy and convenient way to trade the new bond. Once investors purchase the digital bond, they can then easily trade or transfer it to other users. This will greatly increase liquidity in the bond market and make it easier for large numbers of investors to participate.
The use of blockchain technology to issue a bond on the public market is a major milestone for companies worldwide. Siemens’ use of blockchain technology is clearly a step forward in their efforts to modernize traditional financial markets. That said, this could potentially be the first of a wave of companies adopting blockchain technology for digital bond issuances, as the technology continues to gain traction as a reliable digital alternative to traditional methods.
