$ 150 million
A group of grouped loans, structured in HELOC, has been successfully securitized and issued in the form of bonds to investors on Provenance, by a group of enterprising companies. This process saw $ 150 million of these asset-backed loans undergo the process, entirely with the use of the blockchain.
Figure Technologies, who led the company, believes this is the first example of bonds issued only through the blockchain.
While this effort may have been led by Figure Technologies, they are not alone in playing a role. The following companies have each participated in securitization for various reasons:
- Jeffries Group
- Nomura Securities
- Tilden Park Capital
The blockchain that made this securitization possible is known as Provenance. When describing the benefits of its platform, the company states,
“The distributed, unreliable and immutable features of the blockchain eliminate the costs of intermediaries, automate inefficient operational processes, reduce risks thanks to the reliability of the data and enable new innovative products.”
An overview of the Provenance blockchain
While Provenance started life as a product of Figure Technologies, the company experienced emancipation in 2019. This happened at the end of a lucrative and successful STO, which saw the company generate investments of 20 millions of dollars.
Since that event, Provenance has made it clear that one of their objectives would be to change the management of real estate. At the end of their STO, they indicated that they wanted to be the first to achieve the following goals:
- hedge fund on a blockchain
- real estate title entirely on blockchain
- digital mortgage on blockchain
Clearly, the news today of the securitization of a group of HELOCs is well under way.
Provenance.io Completes $ 20 Million Security Token Offer
In announcing the success of the securitization, representatives from several of the participating companies took the time to comment. Here’s what everyone had to say about it.
Mike Cagney, CEO of Figure, said:
“Blockchain has an almost incalculable potential to unlock value for the global financial markets and we are spearheading this transformation by taking up big challenges like securitization … So far, the industry has been slow to skip white papers and proof of concept projects. But this very first production of ABS blockchain in production significantly underlines that times are changing. “
Sanil Patel, CEO of Nomura Securities International, said:
“Nomura is proud to have been one of the main subscribers to Figure’s inaugural securitization on Provenance… Provenance paves the way for the creation of a more accessible securitization market, a market where small issuers can securitize assets at lower cost than the traditional model. “
Brian McGrath, CEO of Jefferies Group, said:
“We are pleased to partner with Provenance to bring to market an agreement that meets the needs of our customers using their innovative technology.”
Founded in 2018, Figure maintains operations in San Francisco, California. Above all, the company seeks to take advantage of blockchain and DLT, in an effort to transform FinTech. Today’s discussion is an example of this implementation.
CEO Mike Cagney oversees the operations of the company.
A “HELOC” simply refers to a home equity line of credit. These are essentially lines of credit that raise equity in their home for financial flexibility – essentially an asset-backed loan. While qualification standards may differ by region, the concept remains the same.
To date, many are wary of HELOCs. While they can offer great benefits when used correctly, they are not without risks. During the housing crisis, about 10 years ago, HELOC-based bonds were very popular. When the market collapsed, many found themselves owing more on their homes than they were worth. As a result, there has been a simultaneous collapse of the associated bonds.
HELOC-backed bonds fell into disuse for several years, but have recently experienced a resurgence.
In other news
If the idea of merging blockchain and DLT with links seems familiar to you, this may be partly due to the following cases. Over the past year, various banks have seen the merits of this infusion of technology and have done their best to test it. Be sure to read the following articles carefully to learn more about the situation of banks around the world.
Santander buys back debt guarantee early
Horizon Tech Stack makes Piedmont bond issuance a reality
Societe Generale SFH turns to Ethereum for the issuance of a security token
World Bank Raises $ 33.8 Million Via Token Bonds