Nomura Research Institute (NRI), the economic research and consulting arm of Nomura Holdings, has issued what it claims is Japan’s first digital bond on the BOOSTRY blockchain platform. As the firm reveals in a press release, “the bonds were structured to enable issuers to keep track of bondholders, which is difficult with traditional bonds”. The aim of the issuance was to expand the functions of the capital markets.
The offering comprised two bonds – a digital asset bond and a digital bond. NRI sold the first directly to investors while Nomura Securities underwrote the second. Nomura Trust and Banking was fiscal agent for both bonds. BOOSTRY, in addition to being the bond register agent, provided its ibet platform.
The settlement process linked ibet with the entitlement registry and the fund settlement network. Financial institutions and issuers operated the approval nodes while investors and service providers operated the user nodes. Having the bond registers for both bonds managed through ibet was key to enabling issuers to keep track of bondholders.
Additionally, a novel feature of the offering was the opportunity for investors to enjoy non-monetary returns in the form of points that can be redeemed at cafes.
Appropriate incentives
Hiroshi Yamada of Nomura Securities’ Capital Markets Department says, “On the investor side, since return on bond investments has been limited to money in the past, having a wider range of return options may serve as an incentive for them to hold bonds for a long period. For issuers, depending on the nature of the return, it is possible to reduce funding costs. This will encourage investors to hold bonds for a longer period of time and lead to more stable corporate bond prices in the secondary market.”
BOOSTRY CEO Toshinori Sasaki believes that allowing individuals to hold corporate securities will enhance the functions of capital markets. “Whereas a typical offering helps increase the number of transactions by existing capital market participants, the structure used in this case will help increase the uses of the capital markets.”
