Earlier this month it has been announced that the World Bank chose the Commonwealth Bank of Australia to deliver the world’s first ever bond transaction on blockchain. This idea is based on the belief that blockchain is able to enhance all processes between debt capital market intermediaries and agents, facilitate raising of capital and securities trading as well as improve operations and regulatory control.
As CoinSpeaker has already reported, the transaction is planned to be settled on Tuesday, August 28. According to the previously revealed information, it was expected that the bond, called Bondi-I (which stams for Blockchain Offered New Debt Instrument), would raise from $50 to $100 million in Australian dollars.
Nevertheless, the real results have exceeded these expectations. The first bond instrument to be fully based on blockchain technology, has managed to raise $110 million.
The funds have been received from a group of Australian investors that includes the bond’s lead manager, the Commonwealth Bank of Australia, local pension fund First State Super, NSW Treasury Corporation, Northern Trust, QBE, SAFA and Treasury Corporation of Victoria. The deal is considered to be only an initial step to moving bond sales away from manual processes to improved and less expensive automation.
Though at this first stage a rather impressive sum was raised, the official representatives of the initiative said that they would welcome investor interest throughout the life cycle of the two-year bond as well.
Arunma Oteh, World Bank Treasurer, expressed her excitement about the fact that the first bond transaction had been so positively received by investors. She said:
“We are particularly impressed with the breath of interest from official institutions, fund managers, 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. Our painstaking work, over the last year, and in partnership with Commonwealth Bank of Australia, was equally instrumental to the success of the transaction.”
Oteh also noted valuable assistance provided by such companies as King & Wood Mallesons, IHS Markit, Microsoft and Toronto Dominion Securities.
In his turn, James Wall, executive general manager of institutional banking and markets international at CBA, explained that such a positive reaction of the market to the newly introduced bond shows that the “market is ready and open to the uptake of emerging technologies” and realizes what opportunities can be provided thanks to the modernization and transformation of the capital markets.
Annually, the World Bank issues approximately $50-$60 billion in bonds for sustainable development. Being positively surprised by such a great interest from various stakeholders to their new blockchain-based initiative, Oteh added that they would further work on looking for new ways to apply cutting-edge technologies which would increase the level of security and efficiency of capital markets.