The World Bank issued landmark bonds denominated in special drawing rights (SDR) in China's interbank market.

The three-year bonds worth 500 million SDR (nearly $700 million) were billed as "Mulan bonds." The Chinese currency the yuan, or renminbi, will be used as the settlement currency.

It is the first issuance of SDR bonds since 1981.

A much bigger wave of such bonds could be expected as the World Bank plans to sell as much as 2 billion SDR of such bonds in China.

The SDR is the reserve currency administered by the International Monetary Fund, the price of which is determined by a basket of currencies including the U.S. dollar, euro and Japanese Yen.

The yuan is scheduled to be included in the basket in October, which will be a milestone in the internationalization of the currency.

The People's Bank of China (PBOC), the central bank, said the bonds were heavily oversubscribed, with about 50 domestic and overseas financial institutions.

Interbank debts denominated in SDR will enrich China's bond market and help promote the global use of the currency, the PBOC said, adding that it will continue to improve SDR bond trading and propel the opening up of China's market.

(Xinhua News Agency August 31, 2016)