The European Investment Bank (EIB) has raised 100 million euros ($121 million) from a two-year digital bond issue, a spokesperson told Reuters. The two-year bond, registered in the public Ethereum blockchain network, priced at 12 basis points below the mid-swaps level, the spokesperson said, equivalent to a yield of around -0.60%, according to Reuters calculations.
The bonds were priced on April 27th 2021, according to a lead manager memo seen by Reuters. Many players in capital markets see blockchain, originally created to run the bitcoin cryptocurrency, as a way to streamline the issuance of securities like bonds and equities. The traditional process is expensive and inefficient, involving numerous steps and multiple parties, and proponents say using blockchain technology could cut costs and boost transparency when raising capital.
The EIB, for example, would usually raise three to five billion euros from a euro-denominated benchmark bond, 30 to 50 times more than from the blockchain issuance. The World Bank issued the first public bond created and managed using only blockchain in 2018, raising A$100 million.
Societe Generale and Santander, together with Goldman Sachs Inc, managed the EIB’s bond sale, according to the lead manager memo. The two European banks have used blockchain for issuing debt in the past, but for bonds sales purchased internally.