The People’s Bank of China (PBOC) has received approval from the World Bank allowing its
issuance of bonds, which are denominated in Special Drawing Rights (SDRs). The World Bank is the first entity to approve of it, and consequently, marks the launch of the SDR bond market of the world’s second-largest economy.
Jim Yong Kim, The World Bank Group President, said “This is a landmark development for China’s bond market and for the SDR as an international reserve asset. 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. 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.”
This new bond issuance is 2 billion SDRs which is equivalent to $2.8 billion. The bonds will be denominated in SDRs and payable in Chinese renminbi (RMB). The precise timing of issue and individual bond terms will be based on favorable market conditions, at the time of issuance.
The World Bank approval of China, as being the first issuer of SDR-denominated bonds, is a further step in the “internationalization” of the Chinese capital markets. It shows the vital role of the World Bank and how it assists in opening new markets as well as developing local capital markets. The World Bank SDR-denominated bonds in the Chinese market are a fantastic opportunity for Chinese investors to support the World Bank's sustainable development activities via a new product. These bonds will also be attractive to international investors who are seeking SDR products to hedge SDR liabilities.
http://news.gold-eagle.com/article/china-announces-new-loan-international-reserve-asset%E2%80%A6which-may-affect-gold-price/353
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