Eighty million dollars — that’s how the World Bank priced the world’s very first public bond created through blockchain technology, and which was arranged by the Commonwealth Bank of Australia (CBA), according to its media release, August 24.
The bank was mandated by the World Bank to arrange the bond earlier this month, and after two weeks of consultation with the market, the bond has raised $110 million AUD ($80 million).
The bond was heavily invested in by notable institutions such as CBA, First State Super, New South Wales Treasury Corporation, Northern Trust, among others. CBA and the World Bank will continually welcome investor interest in the bond throughout its entire life cycle, as well as other inquiries from other market participants regarding the platform.
According to a parallel article by Reuters, the deal was created to test how blockchain could improve the decades-old bond sales practices. This is managed by the CBA, where it said in a statement that the two-year bonds would settle on August 28, and would yield a 2.251-percent increase.
Named “Bond-i” bond, the deal is considered to be baby steps in moving bond sales away from the tedious and traditional processes toward blockchain-powered ones, which many claim to be undeniably faster and cheaper. “Bondi” stands for “Blockchain Operated New Debt Instrument,” and is also a reference to Australia’s most popular beach.
Extremely Well Received
Arunma Oteh, World Bank Treasurer, said that she is delighted that this pioneer bond transaction was “extremely well received” by investors.
“We are particularly impressed with the breath of interest from official institutions, fund managers, government institutions, and banks. We were no doubt successful in moving from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets.”
World Bank must be overwhelmed by the warm reception, as this launch also marks the very first instance that investors have backed its development activities in a blockchain-managed transaction.
Oteh also concluded that the World Bank will continue to “seek ways to leverage emerging technologies to make capital markets more secure and efficient.”
In June 2017, the financial authority launched its own blockchain innovation laboratory in an attempt to comprehend the impact of blockchain and other complementary technologies in sectors such as land administration, health, education, supply chain management, cross-border payments, and carbon market trading.
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