China’s Zheshang Bank issues $17 million asset backed commercial paper utilizing blockchain
Last week China’s Zheshang Bank issued an asset-backed commercial paper (ABCP) where the assets were formed up of receivables on its supply chain finance blockchain. ABCP is a new product supported by the China Interbank Market Dealers Association. It blends traditional commercial paper concepts with asset-backed securities (ABS) and is especially well suited to trade finance because of its short-term nature. The first ABCP published by Zheshang Bank is for six months and 120 million Yuan ($17 million).
Approximately two years ago, the bank published a $68 million loan note, supported by blockchain trade finance assets. “ABCP product characteristics and the concept of serving the real economy and SMEs are very consistent with the long-explored supply chain finance innovation of Zheshang Bank and the practice of supporting the industrial chain to coordinate the resumption of production,” Shen Bin, of Zheshang Bank, said in a statement.
The Zheshang Bank issuance is one of five ABCP pilot projects in the first batch, which is anticipated to a total of 3.324 billion yuan ($470 million). Whereas Zheshang Bank’s assets are based on SME financing, several of the other ABCP pilots link to large institutions and state banks, though the assets are not on the blockchain. For instance, CITIC Construction Investment Securities and China CITIC Bank are underwriting a coal supply chain, and Anji Leasing (car leasing) is publishing an ABCP underwritten by state banks Agricultural Bank and Bank of China.
Various firms are utilizing Zheshang Bank’s supply chain finance platform, including Real Can (Ruikang) Pharmaceuticals. Meantime, across the globe, there have been various commercial paper issuances utilizing blockchain. They comprise from India’s YES BANK (now insolvent) and a consortium of EIB, Santander, Euroclear, and EY. ID2S is a blockchain-based Central Securities Depository owned by Orange and Citi and is targeting commercial paper.