The World Bank has set an indicative yield range for three-year Special Drawing Right (SDR) denominated bonds set for issue in China at 0.4-0.7 percent, the Shanghai Clearing House announced on its website.
The bank is marketing 500 million SDRs ($700 million) of the notes in the interbank bond market on Wednesday, it said. The World Bank has approval from the People’s Bank of China for a 2 billion SDR programme.
The issue will be the first SDR bond in 35 years and is part of a wider push in China to increase the net supply of such bonds, stepping up ongoing efforts to internationalise the Chinese yuan and diminish reliance on the U.S. dollar in global reserves. The bonds will be settled in yuan.
The SDR is a synthetic reserve currency administered by the International Monetary fund, whose value is determined by a basket of other major world currencies.
The decision last November to include China’s yuan in the SDR basket was seen as a major diplomatic victory for Beijing, although analysts predict demand for the bonds will be lukewarm. The yuan will be formally added to the basket on Oct. 1.
ICBC, CCB, CDB and HSBC (China) are the lead underwriters of the bond, the clearing house said in its announcement.