Russian telecom giant MTS has announced that it has issued commercial bonds using blockchain smart contracts, making it the first such transaction in Russia.

The transaction involved placing commercial bonds in the amount of RUB 750 mln with a maturity of 182 days and an annual coupon rate of 6.8% on the OTC market. Sberbank was the primary bond buyer.

The technology for the transaction was provided by the National Settlement Depository (NSD). The transaction was executed via DVP (Delivery versus payment) settlement assuming simultaneous movement of securities and money on the blockchain. NSD also allowed for the possibility of changing the composition of network participants to open the issue to more investors. NSD’s proprietary blockchain platform is based on Hyperledger Fabric 1.1.

"Today, with the participation of our partners, we have successfully executed the first commercial bond issue in Russia using smart contracts based on blockchain throughout the entire settlement chain - from security placement and cash receipt to fulfillment of all obligations to the investo,” Andrey Kamensky, Vice President, Finance, Investments and M&A, MTS, said.

For the transaction, the involved parties had access to a decentralized platform. The project provided confidentiality in working with accounts and considered the requirements of Russian legislation.

Igor Bulantsev, Senior Vice President, Sberbank, said that the transaction confirmed “reliability, efficiency and security of the platform based on blockchain for complex structured transactions.”

In October 2017, NSD announced the issuance and initial placement of the first blockchain-based commercial bonds on the Russian market.