Securitize has joined forces with BNY Mellon to offer a new type of investment fund, according to a press release on October 29.
This fund will provide digital access to high-quality credit products, specifically the top-rated parts of structured loans known as collateralized loan obligations (CLOs).
Instead of using traditional systems, the fund will be issued and recorded on the blockchain. This method converts real-world investments, such as loans, into digital tokens that live on a distributed ledger.
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BNY Mellon will safeguard the fund’s financial assets. A company tied to BNY Mellon will also handle the fund’s day-to-day operations and manage the investments.
Structured loans, especially CLOs, are commonly used by financial institutions to gain exposure to different types of corporate debt. CLOs are split into layers based on risk, with the top-rated AAA layer considered the most secure.
These layers usually pay interest based on market rates, which has made them attractive to many investors. Across the globe, CLO issuance has reached more than $1.3 trillion.
Carlos Domingo, CEO of Securitize, described the fund’s launch as a way to make strong credit products more accessible and easier to manage by using digital systems.
This new fund is being launched as Securitize prepares to go public.
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