The World Bank launched bond-i (blockchain operated new debt instrument), the world’s first bond to be created, allocated, transferred and managed through its lifecycle using distributed ledger technology.
The two-year bond raised a $110 million, marking the first time that investors have supported the World Bank’s development activities in a transaction that is fully managed using the blockchain technology.
Commenting on the development, Arunma Oteh, World Bank Treasurer, said: “I am delighted that this pioneer bond transaction using the distributed ledger technology, bond-i, was extremely well received by investors. We are particularly impressed with the breadth 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.”
On August 10, the World Bank mandated Commonwealth Bank of Australia (CBA) as the arranger for the bond. Read more: World’s first blockchain bond transaction to be launched
The announcement was followed by a two-week consultation period with the market, with key investors indicating strong support for the issuance. Investors in the bond include CBA, First State Super, NSW Treasury Corporation, Northern Trust, QBE, SAFA, and Treasury Corporation of Victoria.
The bond is part of a broader strategic focus of the World Bank to harness the potential of disruptive technologies for development.
Oteh said: “Our painstaking work, over the last year, and in partnership with Commonwealth Bank of Australia, was equally instrumental to the success of the transaction. Commendation also to our other service providers, King & Wood Mallesons, Mark-it, Microsoft and Toronto Dominion Securities.”
The bond-i blockchain platform was built and developed by the CBA Blockchain Centre of Excellence, housed in the Sydney Innovation Lab.
This project builds on the leadership and experience of CBA’s dedicated blockchain team, which has taken a lead role in applying blockchain technology to capital markets.
According to James Wall, executive general manager of IB&M International, CBA – since announcing the mandate, the interest they have received for bond-i has been overwhelming.
“It is clear the market is ready and open to the uptake of emerging technologies and sees the potential evolution of the capital markets. It has been a pleasure to work on such a ground-breaking transaction with a forward-thinking organisation like the World Bank,” Wall added.
Foundation investors in bond-i contributed to the project through their feedback on the platform structure and functionality.
Service providers to the bond’s platform include TD Securities as the market maker, IHS Markit as independent valuation provider, Microsoft as the independent code reviewer, and King & Wood Mallesons as deal counsel.