Vonovia Real Estate Issues $24 Million Bonds Using Stellar Blockchain

Vonovia Real Estate

January 15, 2021

Reading Time: 2 minutes

In recent months, many companies and governments worldwide have moved to the adoption of the Stellar blockchain network. Vonovia, one of Europe’s leading real estate group based in Germany, is the latest to take advantage of the network. On January 13, Vonovia issued a report announcing its initiative to utilize the Stellar blockchain to transfer real estate rights.

The bond digitization operation was via firstwire, an online marketplace for debt capital. Vonovia has previously interacted with firstwire in September 2019 by placing a promissory note loan of 50 million euros on the platform. It is, therefore, fitting that it will employ the same platform on its bond digitization move.

What the digitization means for Vonovia

Vonovia issued a 20 million-euro ($24 million) bond that is to last for a term of three years. The move to bond digitization is quite convenient for the real estate group. Vonovia believes bond issuance using the Stellar blockchain will guarantee it a faster, easier, and cheaper way of financing themselves. Vonovia’s CFO Helen von Roeder notes that the Stellar blockchain transfers will enable “transparent and traceable in real-time” transfers. The features will promote a professional transaction standard and allow the real estate group to reach global investors.

As Vonovia moves forward with the digitized bond, it has the assurance of completing issues digitally in real-time. The initiative will facilitate immediate settlement of transfers and minimize settlement risks that consume a lot of time.

How Germany has paved the way to bond digitization

Germany has progressively opened up its economy to digitization. Previously, real estate companies needed a paper certificate to participate in the business of sale of securities. Luckily, towards the end of 2020, the German government removed this requirement. The move paved the way for the legalization of the disbursement of digital securities.

Germany had already opened up its energy sector to blockchain technology in October 2019. The Stellar blockchain is, therefore, an already attractive financial instrument for companies in the country. Germany’s blockchain strategy aims for increased transparency, market integrity, and investor protection. The digitization of the country’s financial sector is one way to advance towards attaining these goals.

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