According to JPMorgan, its widely followed developing market debt index will now cover Indian government bonds. The fifth-largest economy in the world projected to receive influxes of billions of dollars as a result of its inclusion.
The Government Bond Index-Emerging Markets (GBI-EM) index and the index suite, which benchmarked by around $236 billion in worldwide funds, will cover India’s domestic bonds.
Starting on June 28, 2024, the index provider will add the securities. According to a statement, India’s weight on the index would not exceed 10%.
“India’s inclusion in the bond index is a positive move. The possibilities for international debt investors shrunk after Russia and China’s problems excluded. Hopefully, rating agencies would respect the viewpoint of investors and abandon their erratic and subpar criteria. According to Kotak Mahindra AMC’s managing director, Nilesh Shah, this inclusion will broaden the bond market in India.
23 Indian Government Bonds (IGBs) totaling $330 billion in notional value are eligible, according to JPMorgan. All are “fully accessible” to visitors who are not locals.
India anticipated to have a weight of about 8.7% in the GBI-EM Global index and a maximum weight of 10% in the GBI-EM Global Diversified, according to JPMorgan.
As India anticipated to attain the maximum weighting of 10%, inclusion begin on June 28, 2024, and last for 10 months with 1% increments on its index weighting, according to JPMorgan.
India’s budget imbalance has been high since COVID-19 as a result of increased borrowing. Since a significant portion of the borrowing will done via this manner, Kochar continued, this occurrence will reduce borrowing pressure.
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