DEAL: World’s first SDR bond in China

Author: Brian Yap | Published: 13 Oct 2016

The World Bank has broken ground by issuing the world’s first bond denominated in Special Drawing Rights (SDR) since the 1980s. But adding the renminbi (RMB) to the bond’s underlying composition before the currency was officially incorporated in the SDR basket made the drafting of the terms and conditions a challenging task.  

The International Bank for Reconstruction and Development (IBRD), which operates as part of the World Bank Group, raised $700 million worth of SDR bonds in China’s interbank bond market on August 31. This came less than three weeks after the People’s Bank of China approved the World Bank’s new SDR Denominated Issuance Programme on August 12.

According to an August 26 disclosure document filed with the Shanghai Clearing House, the World Bank’s SDR programme is restricted to a total size of issuance of no more than SDR20 billion with the quota being...