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Global financial advisory firm Bloomberg is considering the inclusion of Government of India bonds in its index, echoing a recent decision by JPMorgan to include these bonds in its global index from June 2024. Bloomberg Index Services Limited (BISL) announced a consultation following feedback received during the Bloomberg 2023 Fixed Income Index Advisory Councils.
In a statement on Monday, BISL revealed its proposal to include India Fully Accessible Route bonds in the Bloomberg Emerging Market (EM) Local Currency Index. The plan suggests a phased incorporation of Indian government bonds over five months, starting in September 2024. The Fully Accessible Route category, which imposes no restrictions on foreign investors, will be incorporated gradually, with each month representing 20% of the full-market value.
Upon full integration into the Bloomberg Emerging Market 10% Country Capped Index, India FAR bonds will be capped at a 10% weight within the index. Subsequently, the Indian rupee is poised to become the third-largest currency component in the Bloomberg Emerging Market Local Currency Index, trailing the Chinese renminbi and the South Korean won.
Bloomberg has initiated a consultation process to gather customer opinions on the proposed inclusion of eligible Indian bonds in the EM Local Currency Indices. Customers are invited to express their agreement with the inclusion plan over the five-month period starting September 2024. Responses are expected by the January 25 deadline.
Bloomberg emphasized that the survey may yield no changes or outcomes. The move to include Indian government bonds in global indices enhances their global acceptability, rendering them more attractive to foreign investors. Analysts estimate that the inclusion of Indian government debt in JP Morgan indices alone could result in inflows of up to $24 billion.
