Standard Chartered successfully issues SDR bonds in China

A man walks past the head office of Standard Chartered bank in the City of London February 27, 2015. REUTERS/Eddie Keogh

SHANGHAI (Reuters) - Standard Chartered Bank (Hong Kong) priced one-year bonds denominated in Special Drawing Rights (SDR) at 1.2 percent on Tuesday, according to Reuters IFR, the first commercial bank to sell SDR bonds.

The bank raised SDR 100m (about 925 million yuan or $139 million) from the offering, within the indicative price range of 1.0 to 1.5 percent.

The notes, to be settled in yuan, were 1.96 times subscribed.

China’s yuan was included this month in the basket of currencies which determines the value of SDRs, the International Monetary Fund’s synthetic reserve currency.

The successful issuance makes the bank the first commercial issuer of such bonds in China, and comes after the World Bank sold three-year SDR bonds at 0.49 percent on August 31, the first time securities had been issued in the synthetic reserve currency in 35 years.

China has been promoting the International Monetary Fund’s SDR as an alternative to the US dollar. The country has also made the alternative reserve currency a key focus of its push to internationalise the yuan.

Some analysts argue that the SDR bonds may provide Chinese investors an opportunity to diversify their portfolios since Beijing’s control on capital outflows in the past year has made it difficult to buy overseas assets.

Reporting by Ina Zhou at IFR and the Shanghai Newsroom; Editing by Shri Navaratnam