The World Bank has priced what it deems the ‘world’s first public blockchain bond’ at AUD$100 million ($73 million) in a settlement to occur next week.
The two-year bond, designed to improve the efficiency of automated financing for countries with extreme poverty by moving away a decades-old manual bond sales process, will be settled on August 28 by the Commonwealth Bank of Australia (CBA), Reuters reported on Thursday.
Dubbed ‘Bondi’ for Blockchain Operated New Debt Instrument – with a subtle nod to Australia’s famous Bondi beach’ – the bond will see CBA as its sole arranger and is priced to yield a 2.251% return. 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, CBA added in the report.
In contrast to other similar pilots or prototypes powered by blockchain, the CBA insisted that Bondi marks the first occasion wherein a legally valid bond issuance – completely issued and managed on a blockchain – is raising capital from public investors.
The World Bank issues between $50 billion-$60 billion in bonds on an annual average for sustainable development in emerging nations.
As reported previously, Bondi will be issued and managed on a private Ethereum blockchain operated by the World Bank in Washington and the CBA, in Sydney. The endeavor will also see the World Bank using Microsoft’s cloud computing platform to run the bond stateside. Microsoft has already validated Ethereum’s “capabilities, security and scale” for the bond issuance, the World Bank previously said.