The Asian Infrastructure Investment Bank (AIIB) has issued its first digitally native note (DNN) on Euroclear's Digital Financial Market Infrastructure (D-FMI).
The amount raised was $300 million to support AIIB’s sustainable development bond programme. The DNN is rated AAA by Moody’s, Standard and Poor’s and Fitch Ratings.
The move is the first digital issuance in USD for Euroclear and the first issuance by an Asia-based issuer on its platform. The issuance was done via Euroclear’s Digital Securities Issuance (D-SI) service, which enables the issuance, distribution and settlement of fully digital international securities on distributed ledger technology (DLT).
In an evolving area of finance, the World Bank issued the first DNN on Euroclear in October 2023. It was a three year note for €100 million ($111 million) and was listed on the Luxembourg Stock Exchange.
The AIIB note is also listed on the Luxembourg Stock Exchange. Citi acted as a dealer as well as issuing and paying agent, BMO Capital Markets as a dealer, and Euroclear Bank as the issuing central securities depository (CSD). Clearing of the bonds can also take place on the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU) and SIX Swiss Exchange (SIX).
Euroclear fully integrated the D-FMI platform with its traditional settlement system, ensuring CSDR compliance.
Philippe Laurensy, managing director and head of product, strategy and innovation at Euroclear, commented in a media release: “As we continue our journey to becoming a digital, data-enabled financial market infrastructure, this issuance signifies another important step forward."
Laurensy added: "Together with our clients and the wider ecosystem, we will continue to embrace innovation and deliver robust technology solutions that can unlock new business opportunities and attract issuers and investors from across the globe.’’
In the same release, AIIB treasurer Domenico Nardelli, said: “Not only is this the first USD digitally native note in Euroclear’s D-FMI, it is also the first time an issuer based in Asia has issued on the platform and the first time a DNN could be held in CMU or SIX.”
Nardelli added: “The success of this transaction proves Euroclear’s D-FMI allows for easy and broad adoption of digital bonds at scale where market participants can buy and sell the bonds within their existing account structures."
He said that "AIIB sees this as an important opportunity to participate in the digitisation of capital markets" and "help connect Asia and the world.”
It is the first time that Citi has worked with AIIB on the issuance of a DNN.
Richard Zogheb, head of global debt capital markets at Citi, commented: “This DNN issuance reflects the growing adoption of digital assets in financial markets. Citi is proud to be a key participant on this important benchmark."
Meanwhile, Summer Hinton, head of global markets international, at BMO said: “Digitalisation is high on banks’, issuers’ and investors’ agendas as the financial industry strives to increase efficiency and resilience. Here at BMO, digital is how we operate and we are pleased to see DCM continue to evolve in innovative ways which will be scalable in the future.”
