Mumbai: After state-run power financier Rural Electrification Corporation Ltd (REC) raised ₹500 crore through its first-ever tokenized bond issue on Monday, Larsen & Toubro Ltd is lining up for a similar transaction this week, a person involved in the plan said. This likely marks a new era for the country’s debt markets.
REC became the first Indian issuer to raise funds through corporate bonds using blockchain-based infrastructure. The bonds, maturing on 31 May 2028, were issued at a coupon of 7.30%, three merchant bankers said. The issue had a base size of ₹100 crore and a green-shoe option of ₹400 crore.
L&T is likely to upload its first tokenized bond issue on the electronic platform for bidding. The company is likely to raise up to ₹500 crore through this issue. The bonds will have a maturity of three years and are expected to be issued at about 7.40%, the person said.
An email sent to L&T on the matter did yield any response till publishing time.
Tokenized bonds are conventional debt securities whose ownership and transaction records are maintained on a blockchain or distributed ledger. Unlike a traditional bond, where ownership and settlement pass through established securities-market infrastructure, tokenized bonds can enable digital recording and potentially near-instant settlement.
The underlying instrument remains a bond, with the issuer liable for coupon payments and repayment of principal at maturity.
RBI, Sebi project
The REC issue was part of a broader project being developed by the Reserve Bank of India and the Securities and Exchange Board of India to test tokenized corporate bonds. It uses the RBI’s wholesale central bank digital currency for payment and a blockchain-based securities wallet, referred to as “DEMAT 2.0,” for holding securities.
Only investors with active security and CBDC wallets are allowed to place bids for the issue.
The technology could eventually reduce settlement risk, improve transparency and automate parts of the bond lifecycle. Tokenization can also allow fractional ownership, potentially lowering investment sizes and broadening participation in corporate bonds.
However, market participants have flagged the need for supporting infrastructure and a sufficiently liquid secondary market for the technology to scale up.
Other state-owned financial institutions are also evaluating the option of raising funds through tokenized bonds, merchant bankers said.
