World Bank prices world’s first blockchain-based kangaroo bond

The World Bank priced the world’s first bond issue to be wholly launched and managed using blockchain in a A$110m (US$800,000) deal in partnership with the Commonwealth Bank of Australia (CBA).

World Bank prices blockchain-enabled bond managed by CBA

CBA said in a statement that following a two-week consultation with the market, the two-year bond with a 2.2% coupon had been priced to yield 2.251%, settling on 28 August.

Bondi

The so-called kangaroo bond – issued in Australian dollars by foreign institutions – has been dubbed “bondi”, to stand for blockchain operated new debt instrument, which also refers to Sydney’s iconic beach.

CBA was mandated by the World Bank as arranger for the bond on 10 August and – aside from CBA itself – investors include First State Super, NSW Treasury Corporation, Northern Trust and Treasury Corporation of Victoria.

“The ‘bondi’ bond forms part of a broader strategic focus of the World Bank to harness the potential of disruptive technologies for development,” the CBA statement said.

Innovation lab

In June last year, the World Bank launched its Blockchain Innovation Lab to understand the distributed ledger technology’s impact on certain use cases including health, education and supply chain management, as well as financial applications.

Arunma Oteh, World Bank Treasurer, said: “I am delighted that this pioneer bond transaction using the distributed ledger technology, bondi, was extremely well received by investors.

“We are particularly impressed with the breath of interest from official institutions, fund managers, government institutions, 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.”