A year after the World Bank first offered its blockchain bonds that ended up raising $73 million, the financial institution went in for the second round of bond sales. Held recently, the tranche saw $33.8 million worth of blockchain bond sales, garnering the interest of new and old investors alike.
As one of three joint lead managers, the transaction was settled by the Commonwealth Bank of Australia (CBA), which is linked with the initiative since day one. Other joint lead managers included RBC Capital Markets (RBC) and TD Securities (TD).
Dubbed as Bond-i, the blockchain bonds are managed entirely through the Ethereum blockchain, making them the first financial security in their tier to do so. From creation to management, the distributed ledger technology (DLT) plays a core role in the bond’s issuance.
The bond has also obtained the moniker of the “Kangaroo Bond,” indicating its roots to Australia. It is due on August 2020.
The Bond Has Gone Through Further Innovation Since Its First Issuance
While the first bond was issued in August 2018, World Bank and its initiative partners CBA and TD enabled Secondary Bond Trading on the blockchain in May 2019. As a result, the bond became the very first financial instrument of its kind to have its issuance and trading recorded on the blockchain.
After these capabilities, Bond-i currently stands as one of the most advanced, fast-moving, and secure instruments in the financial markets. Today, it is placed and transferred using DLT. Among other aspects, this also enhances its value in terms of settlement and risk management.
World Bank, CBA, RBC, and TD, the four partners included in the bond transaction, are all focused on advancing this initiative further. The goal is to make financial instruments more efficient and secure.
Through disruptive technologies that make transactions faster yet safer, World Bank is highly focused on serving its clients, which are typically the governments of various countries.
That is the reason why it set up its Blockchain Innovation Lab in 2017.
With the capabilities brought to the table by blockchain technology and DLT, the financial institution is aiming to streamline current financial processes. At the same time, it is also adding new functionalities to how a traditional banking or security transaction occurs in today’s day and age.
By doing so, the World Bank aims to make traditional transactions more straightforward and accessible.
This especially true for poverty-ridden countries that are held back by physical bounds or the lack of technological infrastructure.
By providing such territories with innovative and helpful tools, the financial institution aims to help them boost industries such as supply chain management, land registration and administration, as well as cross-border payments.
The Bond-i Initiative Also Provides a Gateway to Leapfrog Technology
Since most of such territories have historically missed out on technological innovation as compared to their counterparts from different parts of the world, this provision of blockchain-based initiatives could provide these territories with the opportunity to leapfrog their way into more advanced technologies.
That is to say; these territories could easily skip the step from adopting modem to broadband, and from the Internet to blockchain technology.
This way, these countries, and regions could be on par with the technological advancements in the rest of the world, which would make up for the loss in development that they have endured so far.
The Initiative Highlights the Expertise of Each Partner
The most recent Bond-i tranche is significant because it’s an example of sophisticated technology.
But that is not all.
It is also noteworthy due to how it highlights the capabilities of each of the participating partners.
The World Bank has the status of being one of the world’s most influential organizations with exceptional experience and technological advances on board.
CBA is known for its revered grasp on blockchain technology through its Blockchain Center of Excellence. Whereas, RBC and TD are known for their specific expertise in debt capital markets.
Put together, and you have a bond, developed with the utmost financial accuracy and security, while also boasting of some of the highest technological advancements in today’s day and age.
It is safe to say that these qualities have made the Kangaroo Bond such a roaring success in markets outside of Australia and New Zealand.
World Bank is Quite Happy with the Way Things Have Turned Out with Bond-i
The World Bank team was quick to mention the level of success that they have obtained with the Bond-i initiative. Apart from expressing its satisfaction with the interest of old and new investors of the bonds, the financial institution also highlighted the importance of Bond-i in the greater scheme of things.
“The World Bank’s innovation and experience in the capital markets is key to working with our member countries to increase digitization to boost productivity in their economies and accelerate progress towards the Sustainable Development Goals,” World Bank Head of Funding Andrea Dore said while announcing the tranche’s details.
Seeing the response to Bond-i, it could be speculated that the World Bank might delve into similar initiatives shortly.
The ZB Group Take
The ZB Group sees that events such as this one bolsters the legitimacy and the efficacy of the blockchain. The technology that is the blockchain is penetrating different sectors and adding value in security, efficiency, and transparency. Further bond issuances, tokenization, and offerings are expected to occur via DLT and blockchain based technologies.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
Learn more about ZB Exchange by visiting www.zb.com.