. Ignium.io, a security token issuance and settlement platform based in Estonia, is today announcing the launch of a €10 million bond token program of Viking Commodities Capital (VCC) OÜ. According to an announcement shared exclusively with Finance Magnates, the companies say that VCC’s bond token is the first to be backed by a commodity: grain.
Indeed, Viking Trading OÜ, an Estonia-based firm that trades grain internationally, will be the first recipient of the funding. The company describes itself as “the leading international grain and vegetable oil trading company, sourcing the products from the Black Sea region and distributing them to the markets of the Mediterranean region, North-Africa, Middle-East, Far-East and Americas.”
Yevgen Morgunov, a member of Viking Trading’s Board, said in a statement that “using capital markets for funding our trading activities is part of our strategy.”
“Hence, this transaction acts as a natural next step. We were positively surprised how seamless and simple the process of securities issuance and onboarding of investors across borders was.”
VCC says its tokens act as a “short-term, high yield, asset-backed, fixed income product to global investors.”
The first issuance within the program was €3 million in bond tokens. The tokens have already been fully subscribed to successfully on Ignium’s platform. Artjom Vakulenko, an executive at Viking Capital Commodities, said in a statement that “we are delighted to see investor appetite for this product issued by using innovative technology and means.”
“The instrument represents a good opportunity for investors to be exposed to the commodity sector through short term debt instrument, especially in the context of rising commodity prices and falling interest rates,” Mr. Vakulenko explained.
According to the announcement of the issuance, VCC’s bond tokens reportedly act as “short-term, high yield, asset-backed, fixed income product to global investors.”
“Capital markets are in shortage of 6-months bonds with a 10% per annum coupon rate. These are the kinds of bonds that are provided by VCC through Ignium. Investors across the world can seamlessly and operatively subscribe to these through Ignium’s platform.
Combining grain trading with blockchain technology – for the first time?
Ignium and Viking Trading also see the launch of the €10 million bond token issuance as another important moment in capital markets history.
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Specifically, the companies say that the bond token issuance marks “the convergence of a conventional trading business”–grain trading– with “globalised blockchain technology” in the form of Ignium’s platform.
Reimo Hammerberg, Ignium’s co-founder and chief executive, said that the launch is “a great example of how new technology is being employed for trade finance and capital market transaction by established participants of their craft.”
“This further proves the relevance of the use case of digital assets for mainstream finance,” he said. “We are thrilled to be able to help.”
Ignium: Launching a bond token on our platform costs 10-20 times less than competitors’ services
The announcement of the bond token issuance also says that VCC’s decision to launch on Ignium offered a number of benefits that would not have been possible with traditional fundraising means, or even other security token launches. For example, Ignium previously told Finance Magnates that issuing a security token through Ignium costs roughly 10-20 times less than the fees of competing security token issuance firms.
Ignium also says that because the process of launching a bond token through its platform involves “zero intermediaries,” the process has lower costs and is less vulnerable to procedural mishaps. including high security, lower costs, and “zero intermediaries.”
The company also says that its bond token issuance process is highly secure. “Bond tokens on Ignium’s platform are issued and traded through a blockchain-based platform that is provided by Guardtime,” Ignium’s announcement says.
Ignium describes itself as a blockchain-based platform that companies can use to “issue and sell digital assets to investors around the globe with no intermediaries.” The platform also “offers investors an ‘e-commerce-like’ secondary market, and a state-of-the-art cap-table solution that is constantly updated in real-time.”
Finance Magnates previously reported that Tangible KK, a Japan-based bond securities firm, issued a security token on Ignium’s platform in late 2020. The money raised through the issuance funded the development of ‘Basecamp’, a seven-unit boutique ski resort in Niseko, Japan.
