It seems blockchain technology keeps breaking through new barriers every day, disrupting industries at speed like never before. In a first of its kind, the leasing arm of Toyota Motor Thailand know as Toyota Leasing Thailand Co Ltd has issued debentures using blockchain technology and its underlying distributed Ledger Technology (DLT).
A debenture is a long or medium-term debt instrument employed by big organizations to secure a loan. However, it is not usually back by collateral, instead, relying on the reputation and creditworthiness of the bond issuer. Just like other forms of bonds, an indenture is used to document debentures. It contains the legally binding contract signed by both the bondholder and the issuer.
Blockchain as a means of Storing Debentures Data
The distributed ledger technology is known for its ability to store details and data of several kinds of assets as well as transaction records involving these assets. These data are stored in several locations at once. When compared to the conventional database, DLT is not centralized.
In an interesting move, Toyota Leasing is using distributed ledger technology as the hub of bondholders’ documents and data collection. It will act in a like manner to the part played by the debenture holder registrar found in the bond market structure of Thailand. As a result, DLT will allow the issuers of debentures to follow the live transactions performed by the debenture holders.
At the moment, what we have on the ground in the Thailand bond market is the collection of data on trading info as well as bond features. However, the Thai Bond Market Association (TBMA) does not yet collect or hold information on bondholders. That is where DLT comes in; it will assist with obtaining more data on bondholders, holding potential advantages for the debt securities sector.
TBMA Reviews Blockchain for Bond Registrar
According to a report, TBMA is reviewing the blockchain tech as a platform for bond registrar services concerning corporate bonds. This will be the first developmental phase, followed by the second developmental that will involve bond deposit and servicing, which leads to the last phase relating to the “Bond Coin” structure that is intended for a quick settlement and clearing system.
Toyota offers the First Debentures Utilizing Blockchain
The debenture value of Toyota Leasing Thailand is in the region of 500 million baht and offered to just investors with a high net worth as well as institutional investors. It has a maturity of less than a year standing at 11 months and 29 days. The bondholder is Bank of Ayudhya while the underwriter is the Bangkok Bank; they are representative of the blockchain pilot project named Register Service Platform Phase 1.
By making use of the Distributed Ledger Technology to issue debentures, Toyota will be able to obtain debentures holder information through real-time notification via the register. This will consequently make transactions more efficient and make the issuance process easier in a complicated primary debenture market. The possibility of the transparent transaction of the blockchain technology is a great asset for the debt securities industries.