BBVA issues structured green bond for MAPFRE using blockchain

Spanish banking giant BBVA has announced that it has negotiated the terms and conditions of €35 million structured green bond using blockchain technology.

According to the official release, the funds will go towards supporting green projects within the BBVA’s framework of the Sustainable Development Goals (SDGs), and hence, the bond has been categorized as “green.”

Leading Spanish insurance company MAPFRE invested in the €35 million six-year term bond linked to the evolution of the five-year euro swap rate.

“Structured bonds are negotiable assets with a fixed maturity and a return that can be based on interest rates, shares, an index, or an exchange rate. Furthermore, this kind of product is designed according to the required rate of return, terms, and risk tolerance of the investor, in this case MAPFRE,” BBVA explained.

The terms of the bond were negotiated on BBVA’s internally developed blockchain platform. The bank said that distributed ledger technology (DLT) reduces issuing time while ensuring traceability and immutability of negotiations and agreements.

Furthermore, the technology helped to digitize the entire process in which the negotiation of the structure and prices, and the creation of documentation for the bond are part of the same tool.

“With this deal, BBVA reasserts its firm commitment to both sustainable financing and new technologies. Using DLT – distributed ledger technology – for this transaction allowed us to simplify the processes and streamline the negotiation time frames, which is in line with our pursuit of excellence in customer service,” Juan Garat, BBVA’s Head of Global Sales said.

Last November, BBVA, in collaboration with BNP Paribas and MUFG, completed a syndicated loan using DLT. In December 2018, the bank announced that it has signed a blockchain-based synthetic securitization of €1 billion with the European Investment Bank Group.