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Asian Infrastructure Investment Bank (AIIB) Raises $300M in First-Ever Digital Bond Issuance
The Beijing-based Asian Infrastructure Investment Bank (AIIB), has successfully raised $300 million through its first-ever blockchain-based digital bond issuance. That is according to a recent Bloomberg report. The bank achieved this historic feat with the help of Euroclear’s blockchain platform, a technology also employed by the World Bank for similar ventures.
AIIB Breaks New Ground with Blockchain Bond Issuance
The newly issued AAA-rated bond features a 4% coupon and is set to mature in January 2027. However, there are some key aspects of this development that make it interesting. First is that the bond is the first US dollar-denominated digital bond on Euroclear’s distributed ledger technology (DLT) platform. Also, it is the first time an Asia-based institution is using this blockchain-enabled system for bond issuance.
Invariably, AIIB may just have set a standard for others to follow by integrating blockchain with bond issuance. The move also reflects the growing adoption of blockchain technology, even in global financial markets.
Notably though, AIIB could not have achieved this bond issuance without the help of Citigroup Inc and BMO Capital Markets. While Citigroup managed the distribution and settlement processes, BMO Capital Markets served as a co-dealer, working closely with Citi.
Essentially, Citi, which acted as both the issuing and paying agent for the bond, worked relentlessly to close the gap between the issuer and investors.
On whether the bank has any plans to carry out additional digital bond sales in the near future, AIIB Treasurer Domenico Nardelli insisted that there would be no reason to rush into such decisions. Nardelli noted that the bank will take a measured approach and properly assess secondary market demand before thinking about that.
Blockchain-based Bond Issuance and More Trends
There might be an undeniable buzz around the AIIB’s successful digital bond issuance. Most especially, for being the first Asian bank to do so. However, it might be worth noting that the bank is not exactly the first institution to explore blockchain-based bond offerings. Prominent institutions such as the World Bank and the European Investment Bank have previously conducted similar digital bond sales.
Overall, it might be safe to say that these individual institutions have certainly played their part in setting a precedent for the integration of blockchain technology into traditional financial systems.
This adoption of blockchain technology in bond issuance marks a major step forward. Particularly, for the benefits it offers. That is, in the area of enhanced transparency, reduced operational risks, and improved efficiency in both issuance and trading processes.
Furthermore, some developments in blockchain technology have also been observed in other areas of the financial sector. For example, Citi, Mastercard, and JPMorgan have been experimenting with tokenizing private equity funds through shared ledgers. This has led to improvements in automation and data standardization within traditional financial models.
Without a doubt, the trend towards blockchain and digital assets is currently in top gear. So much, that Japanese firm Metaplanet Inc. also recently announced its plan to acquire $6.3 million worth of Bitcoin through a bond issuance.
Asian Infrastructure Investment Bank (AIIB) Raises $300M in First-Ever Digital Bond Issuance
