First Blockchain bond issue
The World Bank and Commonwealth Bank of Australia (CBA) launched on August 28, 2018, the first public bond issued and managed exclusively through blockchain technology.
According to a statement from the CBA, Australia's largest commercial bank, the bond will have a two-year maturity, with an interest rate of 2.251%. In addition to the CBA, the bond has been in the interest of six other investors, who have raised it to A$110 million (about US$80 million).
The "bond-i" bonus ('Blockchain Operated New Debt Instrument' and a word game with one of Australia's most popular beaches) is being hailed by its creators as a milestone in automating the outdated practices currently used in the issuance of these debt instruments.
According to James Wall, CEO of CBA, the project seeks to revolutionize the traditional bond issuance process (with an issuer, manual assignment in books, an extended agreement, etc.), making it "something that could happen 'online' instantly", with consequent cost savings.
Arunma Oteh, treasurer of the Central Bank, said:
"I am delighted that this pioneering bond transaction using distributed ledger technology, bond-i, has been very well received by investors. We are particularly impressed by the great interest of official institutions, fund managers, government institutions and banks. We certainly managed to move from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets"
Service providers of the bonus platform include TD Securities as market maker, IHS Markit as an independent valuation provider, Microsoft as an independent code reviewer, and King & Wood Mallesons as a trading advisor.
The World Bank says the initiative is part of a broader strategy that seeks to "harness the potential of disruptive technologies" to foster the "development" of impoverished countries.
In June last year, the multinational organization launched a blockchain laboratory to study the impact of distributed accounting technology in areas such as land management, supply chain management, health, education or cross-border payments.
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