After JP Morgan & Bloomberg, FTSE Russell to include Indian bonds in EMGB index from Sept 2025

This would be the third global bond index to include Indian bonds after JP Morgan Chase & Co and Bloomberg.

“As a result of the reclassification of India’s Market Accessibility Level from 0 to 1, Indian government bonds will be added to the EMGBI and regional Asian government bond indices over a six-month period, commencing with September 2025 index profiles,” FTSE Russell, the London-based index provider, said on Tuesday in a notice on its website.

The bond inclusion will be phased in on a monthly basis over six months in six equal tranches.

“All Indian government bonds that are eligible under the FAR programme and meet other index inclusion rules will be added to the index, including securities with an original tenor of 14 years and 30-years issued prior to 29 July 2024,” FTSE Russell said.

FAR bonds are government bonds that non-residents can invest in without limitations and the programme was designed to attract foreign capital to India’s debt market.

As of the October 2024 index profiles, 32 INR-denominated Indian government FAR bonds (USD 473.8 billion in par amount outstanding) are projected to be eligible for the EMGBI, representing 9.35 per cent of the index on a market value-weighted basis.

In the EMGBI 10 per cent Capped Index, India is projected to comprise 10 per cent of the index on a market value-weighted basis. India is projected to comprise 9.73 per cent of the AGBI, on a market value-weighted basis.

Market Accessibility Levels are central to the FTSE Fixed Income Country Classification Framework and are assigned to each fixed-rate and inflation-linked local currency government market based on its fulfilment of a set of observable, transparent criteria.

Accessibility is measured across four dimensions – market, macroeconomic and regulatory environment; foreign exchange market structure; bond market structure; and global settlement and custody. The countries that are tracked by FTSE indices are assigned a Market Accessibility Level of 0, 1 or 2, with 2 representing the highest level of accessibility.

In September 2023, JP Morgan Chase & Co had announced the inclusion of Indian government bonds in the JP Morgan GBI-EM Global index. The inclusion, which is staggered over a 10-month period, started from June 28, 2024 and will finish by March 31, 2025.

In March this year, Bloomberg said that it will include Indian bonds in its Emerging Market (EM) Local Currency Government Index and related indices, effective January 31, 2025. The inclusion of India FAR bonds to the Bloomberg EM indices will also be spread over a ten-month period.

While Indian bonds inclusion to JP Morgan GBI-EM Global index is expected to bring in nearly $25 billion of foreign flows, addition to the Bloomberg Bond Index is likely to attract investment exceeding $5 billion, analysts believe.