World Bank to issue SDR bonds in China

Beijing: China's central bank today permitted a division of the World Bank to issue bonds denominated in special drawing rights (SDR) in the country's interbank bond market.

The International Bank for Reconstruction and Development was approved to issue bonds worth 2 billion SDR (USD 2.79 billion), People's Bank of China said in a statement.?The Chinese yuan will be the currency of settlement.

The first batch will be put on the market "soon".

Interbank debt denominated in SDRs will diversify investment portfolios both in China and abroad. The inclusion of yuan in the SDR will take effect in October.

Industrial and Commercial Bank of China (ICBC), the country's largest bank by market value, will be the lead underwriter for the issue. These will be the first bonds denominated in the SDR since 1981.

"This is a landmark development for China's bond market and for the SDR as an international reserve asset," said World Bank Group President Jim Yong Kim.

"We are very pleased to support China's growing role in global financial markets. World Bank issuance of SDR bonds in China will support the G-20's objective of expanding the use of SDRs and help promote the development of China's domestic capital market," he said in a statement.

It will also increase Chinese investors' access to foreign currencies in the domestic bond market, while opening up new opportunities for international investors seeking high-quality investment products in?the country, Kim said.