Toyota Leasing Issues Debentures Using Blockchain in its $16 Million Thai Market

Brian Njuguna   Jan 17, 2020 02:19 2 Min Read - 2020-01-17T100007.658.jpg

Toyota Leasing Thailand Co Ltd, the automotive leasing arm of Toyota Motor Thailand, has offered debentures through blockchain’s distributed ledger technology (DLT) based on the Securities and Exchange Commission's regulatory sandbox. 

As reported by Bangkok Post on Jan. 16, DLT was deployed because it enables debenture issuers to view the real-time transactions of debenture holders.

Toyota Leasing Thailand’s debenture value is approximated to be 500 million Baht, around $16.4M USD. Debentures are only offered to institutional and high-net-worth investors in this nation with a maturity period of between 29 days and 11 months. 

So what is a debenture?

A debenture is a debt instrument that is given without collateral, an asset that a lender accepts as security for extending a loan. Since no collateral backing exists, a debenture is usually dependent on the reputation and creditworthiness of the issuer for support. Debentures often function like bonds as they yield periodic interest payments referred to as coupon payments. Moreover, they are usually issued by governments and corporations to raise funds or capital. 

Gathering bondholders’ information

Presently, the Thai Bond Market Association (TBMA) has attained trading information and details on bond features. Nevertheless, it still lacks the bondholder’s data, blockchain will be instrumental in eradicating this challenge as it will aid in collecting more information from bondholders. 

TBMA has been studying blockchain technology since July 2018 as it felt that it would transform bond registrar services for corporate bonds. 

In this project, Bank of Ayudhya is the debenture holder representative, whereas Bangkok Bank the debenture underwriter.

By leveraging on blockchain technology, Toyota Leasing Thailand seeks to get real-time information of debenture holders via the registrar as debentures are usually offered based on their reputation and creditworthiness.

These are sentiments aired by the company’s managing officer, Chuenkamol Boobphakam, who believes that DLT will propel transaction efficiency, as well as simplifying the complicated issuance process witnessed in the primary debenture market.


Image source: Shutterstock

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