Indian Government Bonds Join JP Morgan Emerging Market Index

Indian Government Bonds Join JP Morgan Emerging Market Index

Dil Bar Irshad | June 27, 2024 | 03:18 PM IST | Breaking News | Follow on Google News

Indian Government Bonds Join JP Morgan Emerging Market Index

Indian Government Bonds Join JP Morgan Emerging Market Index

Key Highlights:

1. Indian government bonds will be included in JP Morgan GBI-EM starting June 28.
2. The inclusion process will span 10 months, reaching a 10% weight in the index.
3. Expected to bring $20-25 billion in inflows, with $10 billion already attracted.

Indian government bonds are set to join the JP Morgan Government Bond Index for Emerging Markets (GBI-EM) starting June 28, 2024. The inclusion will be phased over ten months, concluding on March 31, 2025. Initially, India’s bonds will have a 1% weightage, which will increase by 1% each month until reaching 10%. This inclusion is anticipated to generate $20-25 billion in inflows into the Indian bond market, adding to the $10 billion already attracted since the announcement in September 2023.

Only bonds issued by the Reserve Bank of India (RBI) under the Fully Accessible Route (FAR) and maturing after December 31, 2026, will be included. This strategic move was confirmed by JPMorgan on September 21, 2023, marking a significant step for India’s integration into global financial markets.

RBI Governor Shaktikanta Das has expressed confidence in managing the expected large foreign fund inflows, citing the central bank’s extensive toolkit. “The RBI has a number of instrumentalities to manage the flows. We have managed it in the past and we will manage it in future also. No worries on that,” Das stated during a press conference on June 7.

Experts see this as a transformative event for India’s fixed-income market. Vishal Gupta, Co-founder of IndiaBonds.com, described the inclusion as a watershed moment that places Indian bond markets firmly on the global investors’ radar. He expects the initial investments to grow over the next few years, enhancing market liquidity and expanding the investor base.

The inclusion comes at a time when global investors are seeking opportunities in emerging markets, steering away from countries like Russia and China. The increased demand for Indian government securities is likely to bolster the bond market, initially focusing on government bonds but potentially extending to bonds with lower credit ratings in the future.

Dil Bar Irshad

Dil Bar Irshad is a seasoned journalist, hails from Jammu Kashmir's Doda, covers political, social, business stories, index stories.