World's first blockchain bond to be launched

Pedro Gonçalves
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World's first blockchain bond to be launched

The World Bank has chosen the Commonwealth Bank of Australia to help organize a new Ethereum blockchain bond denominated in Australian dollars.

The bond is projected to raise between $50-$100m and proceeds will go towards sustainable development initiatives.

The Kangaroo bond, referring to foreign bonds issued in Australia in the local currency, has been named bond-i, an acronym standing for Blockchain Offered New Debt Instrument and also refers to the tourist famous Bondi Beach in Sydney.

Bond-i will be the first digital bond to be entirely created, managed, allocated and even transferred using blockchain technology. When launched, this Kangaroo bond will be issued and distributed on a blockchain platform that runs on an on a private Ethereum network, which will be managed and operated by the CBA and the World Bank

Funds raised from the new blockchain bond will go towards endeavours tied to the World Bank’s Reconstruction and Development division.

The global financial giant has often been at the forefront of financial innovation. The Bank issued the first globally traded and settled bond in 1989, as well the first electronic bond in 2000. (continues…)

Arunma Oteh, World Bank treasurer, said: “Since our first bond transaction in 1947, innovation and investor satisfaction have been important hallmarks of our success with leveraging capital markets for development.

“Today, we believe that emerging technologies, equally offer transformative, yet prudent possibilities for us to continue to innovate, respond to investor needs and strengthen markets.

“We are therefore delighted that after working with our information technology colleagues and the Commonwealth Bank of Australia over several months, that we are now in a position to launch our first blockchain bond transaction. CBA’s commitment and Microsoft’s wealth of experience have been instrumental to achieving this historic milestone.”

The World Bank issues $50-$60bn in bonds on an annual basis to help fund projects.

James Wall, executive general manager of institutional banking and markets international at CBA, added: “We take a collaborative approach to innovating and have a track record of partnering with other leading financial institutions, government bodies and corporates to innovate through blockchain.”

Additional collaborators for the project include Northern Trust, QBE, and the Treasury Corporation of Victoria. Legal firm King & Wood Mallesons also advised on the legal framework for the bond issuance and acted as deal counselor.