The World Bank has just announced that it has raised AUD $50 million (approx $34 million) after selling its blockchain-delivered Kangaroo bonds.
This is now the second round of its bond sales, which first began back in August of last year when the bank raised AUD $110 million by issuing a two-year bond on the Ethereum blockchain. The new bonds are due to mature in May of 2020, after which they will be repaid by World Bank.
World Bank Blockchain Bonds
The press release does not elaborate on the interest rates provided by the bonds or provide any details of their terms.
The sale was co-managed by the Commonwealth Bank of Australia (CBA), RBC Capital Markets (RBC), and TD Securities (TD), and included new offshore investors as well as participants of its first blockchain-based bond sale.
Commenting on the bond-i sale, James Wall, Executive General Manager International at Commonwealth Bank had this to say:
“The tap is an important milestone in demonstrating the full lifecycle management of an issuer’s capital markets needs. It is also a significant step for the platform bringing on additional participants and demonstrating the broader potential of Bond-i as a capital markets platform.”
Sophie Gilder, Head of Blockchain & AI, Commonwealth Bank of Australia also highlighted the bank’s future plans, indicating that further functional upgrades to the platform will increase the efficiency of settlements while improving regularly compliance.
The New Norm?
In May 2019, The World Bank expanded the functionality of its Bond-i (blockchain operated new debt instrument) project by adding secondary trading functionality.
Contrary to popular belief, the bonds have nothing to do with Ethereum investments. Instead, World Bank simply used a private version of the Ethereum blockchain to issue the bonds, taking advantage of the speed and security it offers over traditional electronic bond transfers.
World Bank was one of the first international financial institutions to use distributed ledger technology as a means to allocate, transfer and manage bonds through its life cycle. However, if blockchain-projects like Credits have anything to say about it, blockchain-issued bonds could become the norm.
Do you think more banks will begin issuing their bonds using distributed ledger technology? Is this a case of using new technology to solve a non-issue? Please leave your thoughts in the comments below.
Images are courtesy of Shutterstock.