JP Morgan has decided to include Indian government bonds in its widely tracked emerging market debt index and the inclusion is expected to channel billions of dollars of inflows into the world's fifth-largest economy. The securities will be added from June 28, 2024, with India having a maximum weight of 10 per cent on the index.
According to JP Morgan, India's local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index, bench-marked by about $236 billion in global funds.
A total of 23 Indian Government Bonds (IGBs) with a combined notional value of $330 billion are said to be eligible. All fall under the category of "fully accessible" for non-residents.
“India's weight is expected to reach the maximum weight threshold of 10% in the GBI-EM Global Diversified, and approximately 8.7% in the GBI-EM Global index," JP Morgan said.
The inclusion will extend over 10 months with 1% increments on its index weighting, with India expected to reach the maximum weighting of 10%, JP Morgan added.
In March, JP Morgan had said that support for adding India’s index-eligible, high-yielding government bonds had risen to 60% in its survey, up from 50% in the previous year.
Meanwhile, another major index provider, FTSE Russell also plans to include Indian bonds in its emerging market index.