All is now set for the World Bank to issue a A$100 million ($73.16 million) blockchain-based bond by the middle of next week.
The World Bank bond will be the first bond issuance to utilize the blockchain technology to raise capital from public investors. According to Reuters, the deal is designed to test how the technology might improve decades-old bond sales practices.
The Commonwealth Bank of Australia (CBA) which is serving as the sole manager of the deal, said in a statement that the two-year debt instrument with an expected 2.2 percent yield would settle on Tuesday, 28 August.
The success of the sale of the bond which has been dubbed the “Bondi” (Blockchain Operated New Debt Instrument) would go a long way towards shifting future bond sales away from manual processes towards faster and cheaper automation that is possible on the blockchain technology.
The CBA’s Executive General Manager James Wall, said in an interview that the technology could completely transform the business of bond issuance.
“You’re collapsing a traditional bond issuance from a manual book-build process and allocation process, an extended settlement then a registrar and a custodian, into something that could happen online instantaneously.”
With its long standing AAA rating, the World Bank’s bonds are one of the most secure investment option in the world. The bank issues between $50 billion and $60 billion worth of bonds every year to fund economic programs in developing countries.