CBA, World Bank settle $110m blockchain bond

Bond-i, the first bond instrument to be based entirely on blockchain technology, has raised $110 million from a consortium of Australian investors, including the bond’s lead manager, Commonwealth Bank, First State Super, NSW Treasury Corporation, Northern Trust, QBE, SAFA and Treasury Corporation of Victoria.

The World Bank had appointed CBA two weeks ago as the sole arranger of bond-i, which stands for Blockchain Offered New Debt Instrument.

The banks said that they will continue to welcome investor interest throughout the life cycle of the two-year bond.

James Wall, executive general manager of institutional banking and markets international at CBA, said that the market response to the bond, which will be based on the Microsoft Azure-hosted Ethereum-based network, has been “overwhelming”, far exceeding the $50 million that was expected to be raised.

“It is clear the market is ready and open to the uptake of emerging technologies and sees the potential evolution of the capital markets,” Mr Wall added.

World Bank treasurer Arunma Oteh said that the investment shows that institutions “understood the value of leveraging technology for innovation in capital markets”, adding that the bank will “continue to seek ways to leverage emerging technologies to make capital markets more secure and efficient”.

The bond is part of the World Bank’s efforts to help nations with high levels of poverty transition to sustainable, technology-driven economies.

“Today, we believe that emerging technologies equally offer transformative yet prudent possibilities for us to continue to innovate, respond to investor needs and strengthen markets,” Ms Oteh said.

Treasury Corporation of Victoria managing director William Whitford said that TCV was “proud” to participate in the first public blockchain bond issue, while Derek Yung, COO of group investments at QBE, said that the insurer was “pleased” to be an early investor as there is an “untapped potential for the application of this product to capital markets”.

The bond-i platform was built and developed by the CBA Blockchain Centre of Excellence in the Sydney Innovation Lab.

The AAA-rated bond will settle on 28 August 2018 and reach maturity in two years of settlement.

[Related: CBA chosen to arrange ‘world-first’ blockchain bond]