SHANGHAI, Aug. 14 -- CHINA will issue 1.55-trillion-yuan (US$205 billion) in special treasury bonds in three batches to manage its foreign exchange reserves, China Business News reported today.

The first batch valued at 600 billion yuan will be issued soon, and the remaining batches will be issued at 600 billion yuan and 350 billion yuan, the report said.

China's top legislature in June approved the Ministry of Finance to sell 1.55 trillion yuan in special treasury bonds to purchase foreign-exchange reserves as registered capital for a new overseas investment agency. The move also aims to replace part of the central bank bills to mop up excess liquidity.

The company is likely to be established by the end of September, the report quoted an unidentified source as saying.

The bonds may be sold to an intermediary financial institution, most likely Agricultural Bank of China, before being passed on to the central bank via an asset swap, the report said.