Ethereum Gets $112 Million Bond From French Lender

Societe Generale Group, which is a financial service giant in France, has reportedly issued at least $112 million of bonds. It is worth noting that the latter, which the company issued to itself, is made in the form a security token on the ETH blockchain.

Issuing of Bonds

The announcement was made official by the subsidiary called Societe Generale SFH, which utilized the OFH token. This one right here refers to the so-called “obligations de financement de l’habitat,” which, in English translation, means home financing obligations.

The aforementioned basically represents covered bonds said to be worth one hundred million euros of covered bonds. This is the kind of security that, in one way or another, is completely supported by certain assets. The only catch, though, is that it stays on the balance sheet of the issuer.

However, in a report released recently courtesy of the bond rating agency called Moody’s Investors Science, the sole investor was none other than Societe Generale. In other words, the company issued these securities directly itself, suggesting that no outside buyers whatsoever were involved in the process.

The bond, in particular, is said to include maturity of five years alongside an extension period of 12 months. Moody added that it is, by essence, “pari passu” or “on equal footing.” This means that everything about the bonds is similar to other covered bonds courtesy of the issuer. So, for whatever reason the company fails, whoever holds the tokens during that time would be repaid with the exact fractional figure at the very same time as regular bondholders.

Increased Transparency and Reduced Errors

According to the rating agency, it is hell-bent at the idea of using the blockchain technology for the issuer. It believes that by doing so, it can experience a significant increase in transparency and the possibility of reducing possible errors. These errors, on the other hand, are a result of the complexity, as well as the exact number of intermediaries directly involved in utilizing covered bonds via traditional methods.

Societe Generale’s very own Societe Generale FORGE, which is the company’s blockchain subsidiary, is responsible for developing the pilot. FORGE is also considered one of the 60 internal startups, all of which were launched through the Internal Startup Call.

As far as PwC is concerned, the Big Four professional-services company, it is advising on the project on the blockchain tech. As for the legal adviser, it is none other than the French law firm Gide Loyrette Nouel.