Govt of India bonds are likely to get a further boost with global financial advisory firm Bloomberg, proposing their inclusion in its index, a development that comes close on the heels of JP Morgan’s decision to include these bonds in its global index from June 2024.

“Following client feedback received during the Bloomberg 2023 Fixed Income Index Advisory Councils, Bloomberg Index Services Limited (BISL) is launching a consultation to solicit feedback on the proposed inclusion of the India Fully Accessible Route (FAR) bonds in the company’s Emerging Market (EM) Local Currency Index,” the company said in a statement on Jan 8.

According to the proposal, Indian govt bonds will be incorporated in the company’s index in a phased manner over five months starting from Sept 2024. Each month will include 20% of the full-market value of the bonds falling under the FAR category which does not involve any restrictions on foreign investors.

“Once completely phased into the EM 10% Country Capped Index, India FAR bonds will be fully capped at 10% weight within the index. At that point, the Indian rupee will become the third largest currency component, following the Chinese Yuan and the South Korean Won, within the EM Local Currency Index,” the company said in a statement.

Bloomberg has in its consultation process sought the opinion of its customers on whether they agree with the proposal to include eligible Indian bonds in the EM Local Currency Indices and also if they agree with their inclusion over five months starting Sept 2024. It has fixed a Jan 25 deadline for the responses.

At the same time, the company has also said that the survey may result in no changes or outcome.

The inclusion of Indian govt bonds in global indices adds to their global acceptability and makes it more attractive for foreign investors to buy them. According to financial analysts, the inclusion of Indian govt debt to the JP Morgan indices could alone lead to inflows of up to $24 bn.

(Source: IANS)

-Edited for style

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