The name’s bond, MTS placed bonds… on blockchain
“First transaction of its kind” in the country
Russian telco and digital service provider MTS has placed commercial bonds using blockchain smart contracts, making it the “first transaction of its kind” in the country.
The RUB 750 million ($12.1 million) Series KO-П01 bonds with a maturity of 182 days and an annual coupon rate of 6.8% have been privately placed on the OTC market.
For the transaction, the National Settlement Depository (NSD) provided its proprietary blockchain platform based on Hyperledger Fabric 1.1. The primary bond buyer was Sberbank.
The transaction was executed via delivery versus payment (DVP) settlement assuming simultaneous movement of securities and money using blockchain.
MTS says the framework of the transaction was structured to include the possibility of a dynamic change in the composition of network participants to potentially open the issue to a wide range of investors.
Andrey Kamensky, VP, finance, investments and M&A, MTS, says it intends to continue employing blockchain-based solutions, “primarily in financial markets, due to its clear advantages in increasing transaction transparency and the participants’ confidence, while substantially reducing transaction costs”.
For the transaction, the issuer, the central depository and the investor had access to a decentralised platform. The project provided “confidentiality in working with accounts and considered the requirements of Russian legislation”.
MTS adds that the code for smart contracts is posted on GitHub and is open in accordance with the requirements of the Hyperledger project, where Sberbank and the Moscow Exchange Group have been participating since 2016.
