Red Eléctrica has signed the world’s first multi-currency syndicated loan carried out using blockchain technology and has done so in conjunction with three banking entities: BBVA, BNP and MUFG. The total amount of the loan is 150 million euros. It is undoubtedly an important advance among the initiatives being carried out in the market to explore the potential of this type of technology that, in recent months, has become increasingly relevance in corporate financial transactions.
The transaction was arranged over a private blockchain network through which the six participants in the process have interacted: Red Eléctrica Corporación, the three financing banks: BBVA, as sole bookrunner, BNP and MUFG, and the two legal advisors: Linklaters LLP and Herbert Smith Freehills LLP. This high number of participants, characteristic of syndicated loans, makes the advantages of blockchain technology especially visible.
The use of blockchain technology during the negotiation has allowed the management time to be reduced and has ensured the transparency and traceability of the contracting process. Each step of the negotiation, up to the contracting, leaves a record of both the user and the moment in which it was made. In this way, all the relevant information of the transaction is shared between the nodes of the participants in the private blockchain (Hyperledger), allowing them to know the status of the negotiation at all times and guaranteeing the immutability of the information.
Finally, once the contract is signed, a hash or unique identifier of the document is registered in the public blockchain Ethereum (in its ‘testnet’ test network), to guarantee the immutability before third parties, and maintaining confidentiality at all times.
According to Teresa Quirós, Red Eléctrica's Chief Financial Officer, "this transaction is part of the initiatives that our Company is launching to boost digital transformation and innovation as levers for growth and efficiency, which will enable to address the challenges that the energy transition represents to our Company”.
Red Eléctrica and its digital transformation
Digital technologies open new doors to improvements in efficiency and the emergence of innovative business models, drive cultural change in companies and undeniably place data as one of the core assets of companies. In this regard, the signing of this loan is considered as a further step forward to increase the operational efficiency of Red Eléctrica and to continue advancing in its digital transformation strategy.
In fact, an essential part of this strategy is the monitoring and adoption of new initiatives in this field, which has made it possible to identify blockchain as one of the opportunities for the creation of value and the introduction of greater flexibility and the streamlining of processes and activities.
In addition to the signing of the syndicated loan based on blockchain, more than twenty possible use cases of this technology have been assessed in Red Eléctrica and will be tested over the next year.
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