Iberdrola, BBVA and Santander have arranged a €150m (US$163m) corporate syndicated loan administered entirely on distributed ledger technology (DLT), the three companies have announced.

The parties describe it as the first live syndicated loan whose full lifecycle runs on blockchain, from execution and disbursement through to interest, waivers, repayments, assignments and maturity.

The facility runs on a platform developed by ioBuilders with the support of both banks, designed to digitalise how syndicated financing is managed.

Rob Kay, Global Head of Investment Grade and Emerging Markets Debt at Santander Corporate and Investment Banking’s branch, says: “Innovation is part of Santander’s DNA.

“This transaction represents an important step forward in the evolution of syndicated financing, demonstrating how DLT-based technologies can bring greater efficiency, transparency and traceability to complex financial processes.”

The deal, at a glance

• A €150m (US$163m) corporate syndicated facility

• Iberdrola as borrower, with BBVA and Santander as lenders

• A DLT platform developed by ioBuilders with both banks

• Interest, repayments, waivers and assignments recorded on the ledger

• Real-time visibility for all authorised participants.

How DLT replaces reconciliation with a single shared record

In a conventional syndicated loan, the agent bank, lenders and borrow each maintain separate databases that must be reconciled against one another.

The ioBuilders platform replaces the need to maintain a web of databases with a single, synchronised and immutable record shared by all participating institutions, improving traceability and reducing the risk of operational errors.

Participants interact with the loan in an orderly way under the operational control of the agent bank appointed for the financing.

Over the life of the loan, the platform handles interest calculation and notification, payments of principal and fees and early repayments.

CEO of ioBuilders Carlos Matilla says: “It is also worth highlighting that the technology underpinning this platform opens the door to more efficient management of financial institutions’ balance sheets, enabling new strategies for loan mobilisation in the secondary market.”

The adoption of blockchain technology in financial environments is increasingly becoming a reality thanks to  the benefits it provides

Carlos Matilla, CEO of ioBuilders

Santander and BBVA target a market with limited digitalisation

Syndicated lending is one of the most important segments of corporate finance, but it has traditionally carried a heavy administrative burden and required intensive coordination between multiple parties.

“[The deal] highlights how digital assets are already generating tangible value for the business and contributing to the transformation of financial markets,” Rob adds.

“At the same time, it lays the foundations for an industry collaboration model with the potential to redefine different aspects of corporate financing.”

Alberto Falco, Head of Portfolio Monitoring and Innovation at BBVA, says the product has historically been out of reach for most companies.

“This transaction reflects BBVA’s commitment to the digitalisation of financial markets,” he says.

“Blockchain technology enables a particularly significant transformational leap in syndicated loans, a product that has traditionally seen limited digitalisation and has been accessible to very few clients.

“By combining the advantages of DLT as an immutable record with the programmability of smart contracts to automate operational processes, our ambition is for this platform to become a meeting point that other institutions can join to help drive the syndicated loan market.”

Key partners for Santander

BBVA is a Spanish multinational bank that has run blockchain lending pilots with corporate clients since 2018. It sits alongside Santander as a lender on the Iberdrola facility, and the two banks jointly supported the development of the platform.

ioBuilders is a fintech that builds DLT infrastructure for financial institutions. It developed the syndicated loan platform with Santander’s support and will work with the bank to onboard further lenders.

Iberdrola is a Spanish multinational utility whose digital transformation strategy prioritises innovation in its treasury processes. It is the borrower on the €150m facility, making it Santander’s first corporate client on the platform.