The ‘world’s first public blockchain bond,’ has been priced ay AUD$100 million ($73 million) by the World Bank, in a settlement that will be finalized next week.
According to a report by the Reuters on Thursday, the Commonwealth Bank of Australia (CBA) will settle the two-year bond on August 28. The Blockchain bond is aimed to improve the efficiency of automated financing for countries with extreme poverty by moving away from the decades-old manual bond sales process.
The Blockchain Operated New Debt Instrument is named Bondi, as a subtle nod to Australia’s famous Bondi beach. Priced to yield a 2.251% return, CBA will be the sole arranger of the bond. According to the CBA report “the bond was engineered for the “kangaroo” deal (bonds issued in Australian dollars by overseas institutions) at 23 basis points above Australia’s benchmark rates.”
Despite the existence of similar pilots or prototypes powered by blockchain, the CBA insists that Bondi marks the first occasion wherein a legally valid bond issuance is completely issued and managed on a blockchain – raising capital from public investors.
On an annual average, the World Bank issues between $50 billion-$60 billion in bonds for sustainable development in emerging nations. As per a previous report by CCN, Bondi will be operated by the World Bank in Washington and the CBA, in Sydney and will be issued and managed on a private Ethereum blockchain. To run the bond stateside, the World Bank will use Microsoft’s cloud computing platform. The World Bank previously said that Microsoft has already validated Ethereum’s “capabilities, security, and scale” for the bond issuance.