The World Bank said it raised an additional A$50 million or about $34 million by issuing the second tranche of its Australian dollar-denominated blockchain bond called Kangaroo bond or bond-I, due August 2020.
The bond-I tap issue, managed by by Commonwealth Bank of Australia (CBA), RBC Capital Markets (RBC) and TD Securities (TD), is claimed to be the world’s first debt instrument to be created, allocated, transferred and managed through its life cycle using blockchain distributed ledger technology (DLT).
A tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues, at their original face value, maturity and coupon rate, but sold at the current market price.
In the first tranche in August 2018, World Bank priced the world’s first blockchain-operated debt instrument, termed bond-I, to raise A$110 million.
The investors in the two-year Australian-dollar Kangaroo bond included CBA, SAFA, Northern Trust, QBE Insurance and NSW Treasury Corp., First State Super, Treasury Corp. of Victoria. TD Securities acted as the market maker of the issue.
In May 2019, CBA and the World Bank, with TD acting as market maker, enabled secondary market trading recorded on blockchain for bond-i to make it the first bond whose issuance and trading are recorded using DLT.
The bond-I blockchain platform was built and developed by the CBA Blockchain Centre of Excellence , housed in the Sydney Innovation Lab. World Bank’s infrastructure for the bond runs in Washington, D.C. on the Microsoft Azure cloud computing platform.
Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents. This can help simplify raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.
The World Bank issues between $50 billion and $60 billion annually in bonds for sustainable development. CBA, , RBC, and TD has acted as lead manager for a number of IBRD bond issuances in the Australian and New Zealand capital markets since 2009.
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