Indian government bonds likely to be part of Bloomberg EM index from Sep 2024
The Bloomberg Index Services on Monday proposed to include India’s Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Index from September 2024. The development which can infuse billions of dollars in India’s sovereign debt market comes as Indian government bonds are set to become part of JPMorgan’s Government Bond Index-Emerging Markets (GBI-EM) global index suite from June 2024.
“Following client feedback received during the Bloomberg 2023 Fixed Income Index Advisory Councils, Bloomberg Index Services Limited (BISL) is launching a consultation to solicit feedback on the proposed inclusion of the India Fully Accessible Route bonds in the Bloomberg Emerging Market (EM) Local Currency Index,” Bloomberg Index Services Limited said in a statement.
India’s Fully Accessible Route (FAR) bonds are those that foreign investors can buy without any limits.
The BISL said that under the proposal inclusion of India FAR bonds in the Bloomberg EM Local Currency Indices is to be phased in over a 5-month period starting in September 2024. The Indian FAR bonds will be included in the EM Local Currency indices with an initial weight of 20% of their full market value in September 2024.
“The weight of FAR bonds will be increased in increments of 20% of their full market value every month over the 5-month period ending in January 2025, at which point they will be weighted at their full market value (100%) in the indices,” the statement added.
The proposal said that once completely phased into the Bloomberg Emerging Market 10% Country Capped Index, India FAR bonds will be fully capped at 10% weight within the index. Using data as of November 30, 2023, the index would include 32 Indian securities and represent 6.99% of a $5.96 trillion index.
BISL also cleared that India will continue to be excluded from the Bloomberg Global Aggregate and related indices, while Bloomberg will continue to monitor related market developments.
JPMorgan adding India to emerging-market index
The development comes months after the announcement by JPMorgan to include Indian government bonds in its widely tracked emerging market debt index. The inclusion of Indian bonds in JPMorgan’s Government Bond Index-emerging markets (GBI-EM) index will start on 28 June 2024.
The incorporation will span 10 months. During this period, there will be a gradual increase of 1% in its index weighting. This adjustment is in line with expectations that India will eventually attain the maximum weighting of 10% in the index.
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Published: 08 Jan 2024, 09:58 PM IST
