HONG KONG, Oct 14 (Reuters) - Standard Chartered Bank (Hong Kong) said on Friday that it has obtained approval from the People's Bank of China to be the first commercial issuer of bonds denominated in Special Drawing Rights (SDRs) in China's interbank bond market.
The size of the issuance is 100 million SDRs, or about 925 million yuan, and the bond will be settled in the yuan, the bank said in a statement.
The International Monetary Fund (IMF) included the Chinese currency in its SDR currency basket on Oct. 1 in line with the growing importance of the yuan in international trade and finance, and as a reflection of China's global economic heft.
"The inclusion of the yuan helps reduce the volatility of SDR's exchange rate and therefore makes the value of SDR more stable," said Wesley Yang, head of Financial Markets of Standard Chartered China.
"These SDR bonds, to be settled in RMB, will help promote SDR financial instruments, provide a channel for investors to invest in foreign currency bonds in the onshore market, and offer more diversified bond products in the market."
A unit of the World Bank issued the first SDR denominated bond in China's interbank bond market in August.
SDRs are an international reserve asset created by the IMF. The value of the SDR is based on five major currencies, namely US dollar, euro, Japanese yen, British pound, and the newly added Chinese yuan.
Road shows of the Standard Chartered SDR bonds will be held in Beijing and Shanghai. (Reporting by Michelle Chen; Editing by Shri Navaratnam)