Leading financial services provider CGS-CIMB and private capital platform iSTOX announced today the issuance of a short-term debt instrument in the form of digital securities. The S$150-million (or US$112-million ) multi-tranche commercial paper will be used to fund operating expenses and near-term obligations of CGS-CIMB. The first tranche of S$10 million was over-subscribed by accredited individual and corporate investors on the iSTOX platform. Investors were offered a 1% per annum interest rate over 3 months. The full S$150-million programme is being carried out using digital securities, with no traditional issuance happening alongside the digital channel.

The CGS-CIMB commercial paper is the first in a new product line of digital commercial papers by iSTOX, a multi-asset platform that also facilitates digital issuances for other private market securities, including funds, bonds and equity. Commercial papers are short-term debt issued by companies, with tenures ranging from 1 to 270 days. The commercial paper market is worth over US$1 trillion in the US and over US$950 billion in Europe. Asian companies have historically been more accustomed to raising funds through bank loans or bonds or through issuing equity, but commercial papers are gaining momentum.

The CGS-CIMB digital commercial paper is now listed for trading on the iSTOX secondary exchange, giving investors the option to cash out ahead of maturity. The paper matures 3 months from its issuance, after which investors can decide whether to subscribe for a fresh 3-month term. If the next tranche is oversubscribed, subscribers of the current tranche will be guaranteed an allocation if they choose to roll over their investments. The 364-day commercial paper programme provides for multiple tranches over the next few quarters, up to a maximum amount of S$150 million, a figure that can be increased should the need arise. Taurus Point Capital Pte. Ltd. was the adviser to CGS-CIMB for this issuance.

iSTOX is a global private market platform. Using blockchain and smart contract technology, iSTOX automates manual processes in the issuance, custody and post-sale management of a security, such as the payment of dividends or coupons, the real-time tracking of ownership, and the settling of trades, which happens instantly on the iSTOX exchange instead of the 2 or more working days needed by most exchanges.

For investors, the efficiency gains from tokenisation enables fractionalised ownership, lower fees and better liquidity. Accredited investors using the iSTOX platform today come from 24 countries, spanning Asia, Europe, the Americas (excluding the US), Australia and New Zealand. For issuers, iSTOX offers a lower minimum fundraising threshold, lower fees, as well as faster speed to issuance, which means less uncertainty in a rapidly changing market.