JP Morgan is set to add Indian government bonds to its widely-tracked emerging markets debt index, paving the way for billions of inflows to the world's fifth-largest economy.
The JPMorgan Government Bond Index-Emerging Markets (GBI-EM) benchmarks will include Indian government bonds from 28 June 2024, the firm said, with a maximum weight to India of 10% of the index.
The bank said 23 Indian Government Bonds (IGBs) with a combined notional value of $330bn, all of which fall under the "fully accessible route" for non-residents, are eligible for inclusion.
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Inclusion of the bonds will be staggered over a 10-month period starting on 28 June 2024 and ending on 31 March 2025, with 1% weight being included each month.
About $246bn in global funds are benchmarked to the GBI-EM family of indices, JP Morgan said.
Madhavi Arora, lead economist of Mumbai-based financial group Emkay Global, told the FT that the resulting inflows into India's government bond market could reach $25bn-$26bn as investors who track the index rebalance their portfolios.
