China Information Technology Development Limited (CITD) (HKEX: 8178), a leading technology company specializing in AI and cloud technologies, has announced its plan to issue HK$100 million worth of Bonds using distributed ledger technology (DLT). The proposed issuance aims to revolutionize the bond market by leveraging blockchain and smart contract technologies.
The Bonds, with a maturity date set for June 27, 2053, will be documented using the Digital Ownership Token (DOT) standard and implemented through a binding Ricardian Contract. By incorporating all bond documents and smart contract codes into the Bond Security Token, CITD ensures that the Token itself becomes the security, providing greater certainty, efficiency, and security for bond holders. Moreover, this approach allows investors to directly hold and control their own securities, eliminating the need for a third-party custodian.
The use of DOT standard in the Bond Security Token sets a new precedent in the bond market, offering enhanced security and transparency compared to traditional paper-based bond offerings. The tokenization of debt instruments using DOTs enables a clear record of ownership and simplifies the transferability of securities. Additionally, the elimination of third-party custodians reduces risks associated with securities custody.
CITD’s decision to embrace DLT and the DOT standard aligns with its strategic vision for the development of Web3.0 and blockchain business. As the Hong Kong government actively supports the growth of Web3.0 and decentralized finance (DeFi) industries, CITD aims to leverage its expertise in digital transformation to pioneer innovative solutions in various sectors, including finance, healthcare, and logistics.
The issuance of the Bonds in the form of Bond Security Tokens is expected to generate capital more efficiently and cost-effectively, while showcasing the benefits of blockchain technology to potential investors. CITD’s approach eliminates intermediaries and enables direct deposit of tokens into investors’ wallets. Bond Security Tokens can be easily transferred and stored, streamlining bond transactions and offering a secure method for managing investments.
The yield to maturity of the Bonds is set at 3.73% per annum, which the Directors of CITD consider to be fair and reasonable compared to similar treasury yields. The terms and conditions of the Bonds have been reviewed by legal advisers, ensuring compliance with regulatory obligations in Hong Kong.
With an issue period from the First Issue Date to July 12, 2023, CITD will keep shareholders and potential investors informed of the outcome of the bond issuance. As the company expands into the Web3.0 space, it seeks to solidify its position as a leader in the emerging blockchain ecosystem, driving the widespread adoption of digital securities.