World Bank Prices Blockchain Bond at A$100M

The blockchain-powered bond to be issued by the global financial institution will have a value of A$100 million.

The World Bank has revealed that a blockchain-based public bond it will launch will be for A$100 million ($72.7 million), Reuters reported on Thursday. The news comes from the Commonwealth Bank of Australia (CBA), which is the sole arranger of the deal.

The two institutions made public their intention to launch a bond entirely running on blockchain technology earlier in August, but did not disclose its worth. Reuters now reports that it’s a two-year bond, due to be settled on August 28 and is priced to yield a return of 2.251%, according to the CBA.

In a collaborative effort, the World Bank and the CBA will issue a so-called “Bondi”, short for Blockchain Offered New Debt Instrument, and distribute it on a jointly operated Ethereum blockchain platform. The partners decided to use distributed ledger technology (DLT), as it is able to “streamline processes among numerous debt capital market intermediaries and agents,” as noted by the World Bank in a press release.

“You’re collapsing a traditional bond issuance from a manual bookbuild process and allocation process, an extended settlement then a registrar and a custodian, into something that could happen online instantaneously,” CBA executive general manager James Wall told Reuters earlier this month.

Nearly 30 years ago, the World Bank was the first to issue a globally traded bond and it also pioneered the issuance of fully integrated electronic bonds in 2000. Every year, the global financial institution issues between $50 million and $60 million in bonds aimed at battling economic hardship in developing countries. At present, the World Bank’s bond has an AAA rating.