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The International Bank for Reconstruction and Development (IBRD or the World Bank) has announced that it has raised an additional AUD 50 million (or approximately USD 33 million) for its Kangaroo bond due August 2020 using blockchain technology.
In August 2018, the World Bank raised A$110 million via bond-i (blockchain operated new debt instrument), which became the world’s first bond to be created, allocated, transferred and managed through its life cycle using distributed ledger technology (DLT). Earlier this year, it recorded a secondary bond market trade on a blockchain in collaboration with Commonwealth Bank of Australia (CBA), making it the first bond whose issuance and trading was recorded using DLT.
The IBRD said that the second tranche saw expanded market participation with the Bond-i platform combining three joint lead managers, CBA, RBC Capital Markets (RBC), and TD Securities (TD). It brought together new market participants, including an offshore investor, and the existing investor community including ongoing support and input from TCorp (NSW Treasury Corporation).
Built using the Ethereum blockchain, the bond-i platform was built and developed by the CBA Blockchain Centre of Excellence, housed in the Sydney Innovation Lab.
“The subsequent issuance builds on the success of the platform and further enables capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions,” the press release reads.
Currently, debt capital markets comprise of several interconnected intermediaries and agents, who undertake intersecting roles for markets to function. Blockchain has the potential to streamline processes for raising capital and trading securities, increase operational efficiencies, as well as enhance regulatory oversight.
“The tap is an important milestone in demonstrating the full lifecycle management of an issuer’s capital markets needs. It is also a significant step for the platform bringing on additional participants and demonstrating the broader potential of Bond-i as a capital markets platform,” said James Wall, Executive General Manager International at Commonwealth Bank.
Sophie Gilder, Head of Blockchain & AI, CBA, said that they now plan on delivering additional functionality to deliver “greater efficiencies in settlement, custody and regulatory compliance.”
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