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.
