BLOOMBERG IS CONSIDERING THE POSSIBILITY OF LISTING GOVERNMENT SECURITIES (G-SECS)

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Following JP Morgan and FTSE Russell, Bloomberg is now considering the inclusion of Indian government bonds in its global indices. While JP Morgan has granted entry, FTSE Russell has placed India on its watchlist. Bloomberg Index Services (BISL) has announced plans to conduct advisory meetings for its fixed income index across Asia, Europe, and the US. These meetings will deliberate on the potential inclusion of Indian Government Securities (G-Secs) in Bloomberg’s indices. BISL will convene the Bloomberg Fixed Income Index Advisory Councils in both October and November.

During this annual exercise, BISL will gather feedback from participants on various aspects related to its fixed-income indices. Specifically concerning India, BISL will explore the “potential eligibility of India Treasury Fully Accessible Route (FAR) bond market for the Global Aggregate and the Emerging Market Local Currency Indices.” The FAR list, introduced by the RBI in 2020, comprises 23 securities with no restrictions on foreign investors’ holdings.

BISL’s announcement follows JP Morgan’s decision to include Indian government bonds in its emerging market index, potentially resulting in inflows of at least $24 billion into India. JP Morgan also announced that India would be part of the GBI-EM Global Index suite from June 28, 2024, identifying 23 FAR securities with a combined notional value of $330 billion as eligible for inclusion.

Edelweiss Asset Management Company anticipates increased demand and favorable market conditions for Indian government bonds over the medium term, driven by JP Morgan’s decision. These bonds are appealing due to their lower correlation with other emerging markets and global bonds, as well as their relatively higher yields. However, there are risks to consider, including a sustained increase in US Treasury yields and elevated crude oil prices, which could impact market flows.

On the other hand, FTSE Russell has decided to keep India on its watchlist for potential inclusion in its emerging market government bond index following its annual country classification review.

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