The Asian Infrastructure Investment Bank (AIIB), based in Beijing, raised $300 million for its first bond issue by utilizing blockchain technology from Euroclear, the World Bank’s blockchain platform.
The AAA-rated bond has a January 2027 maturity date and a 4% coupon. This was released via the distributed ledger (DLT) technology from Euroclear.
This is the first instance of a blockchain-enabled bond issuance technology being used by an Asian institution, and it’s also the first digital bond on the network denominated in US dollars.
Two major players in the deal were Citigroup Inc. and BMO Capital Markets. Citi handled the distribution and settlement procedures between the issuer and investors. In addition to acting as the issuing and payment agent, Citi was a co-dealer with BMO Capital Markets.
Prior to contemplating any digital bond sales in the upcoming year, the bank will assess secondary market demand, according to AIIB Treasurer Domenico Nardelli. The fledgling but expanding nature of digital bonds in the fixed-income market is reflected in this cautious approach.
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The AIIB’s successful issue is in line with the efforts of other significant organizations investigating bond sales based on blockchain technology. The World Bank and the European Investment Bank are two notable examples that have recently carried out comparable sales of digital bonds.
An important step toward integrating blockchain technology into conventional financial markets has been taken with this development. Institutions like the AIIB may be able to increase efficiency, lower operational risk, and improve transparency in the bond issuing and trading processes by utilizing distributed ledger technology.
As more organizations use blockchain technology, these advancements may bring about more significant adjustments to the way the world’s fixed-income markets function.
About AIIB
Asian Infrastructure Investment Bank (AIIB) finances Infrastructure for Tomorrow—sustainable infrastructure. They started in Beijing in January 2016 and already have 109 certified members worldwide. They have USD100 billion in capital and Triple-A ratings from key international credit rating agencies. By generating new financing and investing in green, technology-enabled, regionally connected infrastructure alongside partners, AIIB serves clients’ needs.
