Yesterday the World Bank announced it has priced a CHF 200 million digital bond to be issued on June 11 on the SIX Digital Exchange (SDX) and settled using the Swiss Franc wholesale central bank digital currency (wholesale CBDC). The Swiss National Bank (SNB) is currently in pilot mode for its wholesale CBDC on the SDX DLT platform as part of Project Helvetia. Several digital bonds have used it for settlement. However, the World Bank, or rather the International Bank for Reconstruction and Development (IBRD), is the first international issuer to use the wCBDC.
Just last month the World Bank’s treasurer, Jorge Familiar, pondered a possible issuance at an SNB event. A month on, the seven-year, Aaa/AAA rated security is ready to launch.
“This achievement marks another significant step in the World Bank’s commitment to increasing capital markets’ efficiency through digitalization in partnership with central banks and central securities depositories,” said Mr Familiar.
The bond has mainly been placed in Switzerland with 60% allocated to banks and corporates. Institutional investors make up 39% and central banks and official institutions the balance. Commerzbank is the sole lead manager as well as paying and issuer agent for the bond. Coupons and redemption payments will be made using tokenized CHF. However, unless the wCBDC gets the formal green light, that might be tokenized CHF issued by SDX. That was the case before the Helvetia pilot.
Critical role of CSD integration
In November 2022, UBS debuted a CHF 375 million digital bond on SDX. For the first time it linked the SDX central securities depository (CSD) to the main SIX SIS CSD. This allowed a dual listing on both SDX and SIX main exchange, supporting institutions not yet ready for blockchain. With the passage of time, SDX has integrated with Clearstream and Euroclear, enabling the World Bank’s bond to settle through four different CSDs.
On the topic of Euroclear, last year the World Bank issued a digital note on Euroclear’s D-FMI infrastructure. Plus, it was the first major institution to adopt blockchain for bonds in 2018 with the bond-i issuance. Like the European Investment Bank (EIB), it is one of the most prolific digital issuers.
Meanwhile, the digital bonds that were previously settled using the wCBDC include issuances by Basel, Zurich, Lugano and St Gallen.
