ICBC has been formally commissioned by the World Bank to serve as the lead underwriter and lead book manager of the Special Drawing Right (SDR)-denominated bonds of the World Bank. The bonds registered by the World Bank are worth 2 billion SDR units and the first tranche totaling 500 million SDR units will be issued in China’s inter-bank bond market.

Created by the International Monetary Fund (IMF), SDR serves both as the reserve assets and the unit of account with its value determined by a basket of currencies including USD, EUR, JPY and GBP. Compared with the bonds denominated by a single currency, SDR-denominated bonds feature more stable income, lower exchange fluctuation and certain risk aversion capacity, which can be conducive to diversifying and internationalizing the allocation of financial assets, reducing the risk exposure and offsetting the exchange rate risk of the single currency.

Totally 13 SDR-denominated bonds worth USD 594 million had been issued in international market before 1980. This SDR-denominated bond issued by the World Bank is a significant new step and will be the world’s first SDR-denominated bonds since 1981. On December 1, 2015, IMF announced that RMB will join the SDR basket on October 1, 2016, which marks an important milestone in the process of RMB internalization. To expand the application of SDR, the People’s Bank of China has issued the foreign exchange reserve, international collection and payment and international investment position with SDR as the reporting currency, which, coupled with the SDR-denominated bonds to be issued, will further expand the use scope of SDR.