Standard Chartered Bank (Hong Kong) Limited announced on Friday that it has received approval from the People's Bank of China to become the first commercial issuer of bonds denominated in Special Drawing Rights in China's interbank bond market.

The size of issuance is 100 million SDRs – about 925 million yuan ($138 million) – and the bonds will be settled in the renminbi. Standard Chartered Bank (China) Limited has been appointed as the joint lead underwriter and joint lead bookrunner for the issuance.

Effective October 1, the renminbi has been formally included in the SDR basket of the International Monetary Fund. This is "global acknowledgement of China's rise on the global stage and recognition of its efforts to integrate the economy and financial markets with the rise of the world", said HSBC in a recent report.

Wesley Yang, head of financial markets of SCB China, said, "The inclusion of the renminbi helps reduce the volatility of SDR's exchange rate and therefore makes the value of SDR more stable. This not only increases the attractiveness of SDR as a reserve asset but also makes it a better investment and financing tool. It helps promote the two-way opening and development of China's capital market, accelerate the pace of renminbi internationalization, and promote the capital account convertibility."

Now the market is getting more interested in SDR-denominated products for better risk management. He said these SDR bonds, to be settled in renminbi, 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.