China Information Technology Development Limited (CITD) (HKEX: 8178), a leading technology company specializing in artificial intelligence and cloud technologies, has announced its plan to issue HK$100 million worth of bonds using technology distributed ledger (DLT). The proposed issuance aims to revolutionize the bond market by leveraging blockchain and smart contract technologies.

The Notes, with a maturity date set for June 27, 2053, will be documented using the Digital Ownership Token (DOT) standard and will be implemented through a binding Ricardian Contract. By embedding 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 bondholders. Additionally, this approach allows investors to directly hold and control their own securities, eliminating the need for a third-party custodian.

The use of the DOT standard in the Bond Security Token sets a new precedent in the bond market, offering greater security and transparency compared to traditional paper bond offerings. Tokenization of debt instruments through DOT allows for a clear record of ownership and simplifies the transferability of securities. Additionally, the elimination of third-party custodians reduces the risks associated with the custody of securities.

CITD’s decision to adopt DLT and the DOT standard aligns with its strategic vision for Web3.0 and blockchain business development. As the Hong Kong government actively supports the growth of the Web 3.0 and decentralized finance (DeFi) industries, CITD aims to leverage its expertise in digital transformation to pioneer innovative solutions across various sectors including finance, healthcare and Logistics.

The issuance of bonds in the form of bond security tokens is expected to raise capital more efficiently and profitably, while showcasing the benefits of blockchain technology to potential investors. The CITD approach eliminates intermediaries and allows direct deposit of tokens into investors’ wallets. Bond security tokens can be easily transferred and stored, expediting bond transactions and providing a secure method of managing investments.

The yield to maturity of the Bonds is established at 3.73% per annum, which the Directors of CITD consider fair and reasonable in comparison with similar treasury yields. The terms and conditions of the Notes have been reviewed by legal advisers, ensuring compliance with regulatory obligations in Hong Kong.

With an issuance period from the First Issuance Date until July 12, 2023, CITD will keep shareholders and potential investors informed about the result of the bond issuance. As the company expands into the Web3.0 space, it looks to cement its position as a leader in the emerging blockchain ecosystem, driving the widespread adoption of digital securities.