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UBS introduces hybrid digital bond

The 375 million Swiss franc ($370 million) bond issued by UBS AG is the first digital bond ever to be openly traded and paid on both blockchain-based and conventional exchanges, according to the Swiss bank on Thursday. It will be the world’s first public benchmark bond that investors may access in both digital and traditional markets is the CHF 375 million bond, which will be issued on the blockchain-based platform of SIX Digital Exchange (SDX) and dual listed and traded on SDX and SIX Swiss Exchange (SIX).

The blockchain-based platform of SIX Digital Exchange (SDX) will be used to issue the three-year bond with a 2.33% coupon. It will be dual listed on SDX and the SIX Swiss Exchange. According to a release, the digital bond has the same legal standing and credit rating as a conventional senior unsecured note from UBS AG. “We are pleased to introduce the first UBS digital bond by utilising distributed ledger technology. This demonstrates our dedication to assisting in the creation of new financial market infrastructure‚ÄĚ, Beatriz Martin, UBS’s treasurer, stated.

The central securities depository (CSD) network powered by the SDX distributed ledger resolves the digital bond. According to UBS, settlement is immediate, automatic, and does not require a central clearing counterparty. By using an operational link made public last month, investors can settle and clear the digital bond directly on SDX CSD or indirectly on SIX.

Last year, the European Investment Bank released its first blockchain-based digital bond.