India Debuts In JP Morgan Bond Index, $20B-25B Inflows Expected

Indian government bonds in the Fully Accessible Route (FAR) were included in JP Morgan’s emerging market bond index (GBI-EM GD) on Friday, in a move that could result in an inflow of $20 billion-25 billion (around ₹1.66 lakh crore to ₹2.08 lakh crore).

What Happened: From the beginning of June 28, 1% of Indian bonds will be added to the index every month for 10 months, taking the weightage to 10% in the index. India will receive around $2 billion (₹16,686 crore) inflows each month until India reaches maximum weightage, resulting in the $20 billion inflows.

According to Reuters, India has already received an inflow of $10.5 billion (around ₹87,601 crore) from active fund managers since India’s inclusion in the bond index was announced in September 2023.

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India will become the 25th market to enter the bond index since its inception in 2005.

A JP Morgan note said India’s bonds will have the highest duration across the index at 7.03 years with an above-average yield to maturity at 7.09%. The inclusion will also increase EM Asia’s weight in the GBI-EM GD index as EM Asia’s weightage is set to increase to 47.5% of the total index by the First quarter of 2025, the note added.

In March 2024, Bloomberg also announced it will include India's Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index from January 2025.

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