April 18, 2024 00:35 (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
US reacts to Modi's 'India will not hesitate to kill terrorists in their homes' remark, encourages talks | Bihar worker shot dead by terrorists in Kashmir's Anantnag | Centre hails former PM Manmohan Singh for liberating economy in 1991 | Mamata Banerjee's TMC manifesto promises 10 free LPG cylinders, 5 kg free ration, no CAA | Ram Navami: 'Surya Tilak' illuminates Ram Lalla idol's forehead in Ayodhya Ram Temple
Inclusion of Indian bonds in JP Morgan and Bloomberg indices proof of strong Indian economy: Expert Indian Bonds
Image Credit: Pixabay

Inclusion of Indian bonds in JP Morgan and Bloomberg indices proof of strong Indian economy: Expert

India Blooms News Service | @indiablooms | 01 Feb 2024, 11:05 am

Mumbai: The long-awaited inclusion of India in global indices such as the JP Morgan GBI-EM Index and Bloomberg (subject to approval by index participants) in the Bloomberg EM Local Currency Debt Index is a testament to the strength of the Indian economy, making it attractive to global fixed-income investors, according to Vishal Goenka, Co-founder, IndiaBonds.com.

On January 8, Bloomberg Index Services proposed the addition of eligible Indian bonds to its local currency index for emerging markets starting in September.

This potential inclusion could result in significant capital inflows in India. This proposal follows JPMorgan's announcement on September 22 to incorporate India into its widely monitored followed market debt index, effective from June.

“We are already witnessing a growing interest in bonds from domestic non-institutional investors and the targeted international investments will further enhance the depth and strength of our fixed-income markets,” Goenka said.

As early as 2013, the Indian government started discussions for the incorporation of its securities into global indexes. However, impediments arose due to restrictions on foreign investment in domestic debt.

In April 2020, the Reserve Bank of India addressed this issue by introducing securities exempt from foreign investment restrictions, operating under a mechanism known as the "fully accessible route" (FAR).

With a 10-year bond yield of 7.17%, India has emerged as an attractive destination for the allocation of investment amongst the emerging markets in Asia with foreign investors owning around 2% of the government bonds, Goenka said.

“With this, global investors will be able to invest in 23 Indian Government Bonds whose combined value is around $330 billion, he notes.

The development has potential to generate USD 25-30 billion of foreign investments into Indian bonds over the next 12 months increasing liquidity and demand for Indian sovereign bonds, consequently leading to lower yields and reduced borrowing costs for the Indian government, according to Goenka.

The inclusion in turn should also reduce corporate borrowing rates in the future, he underscores, adding that this can bolster India's position in the global financial landscape and help achieve the $5 trillion economy goal by 2030.

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.