Bloomberg could discuss India’s inclusion in its bond index this month

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Before the euphoria over the inclusion of Indian bonds in JP Morgan’s GBI-EM Global index settles down, comes the possibility of Bloomberg Index Services (BISL) exploring the eligibility of Indian sovereign bonds in Bloomberg Fixed Income Index in Asia, Europe, and the US. The Economic Times has reported that the topic will be discussed among other things in October only. The inclusion of the country’s sovereign bonds is expected to take place from June 28 next year. These bonds can reach a maximum weightage of 10%. Right now, as many as 23 government of India bonds with a cumulative notional value of $330 billion are eligible for the JP Morgan index. “BISL will be conducting the Bloomberg Fixed Income Index Advisory Councils (the “IACS”), in the US, Europe and Asia in October and November: These IACS are conducted annually by BISL to obtain feedback from a number of index users on a range of topics related to the Bloomberg Fixed Income Indices,” read a Bloomberg document on October 2. The Bloomberg document added that discussions would be held on the “potential eligibility of India Treasury Fully Accessible Route (FAR) bond market for the Global Aggregate and the Emerging Market Local Currency Indices.” Like the JP Morgan index, the Bloomberg index, too, is a benchmark for global investors to buy bonds. If the decks are finally cleared for the inclusion of FAR bonds in the Bloomberg Global Aggregate Index, the country could attract a maximum amount of $20-25 billion, the report stated. Incidentally, it is due to knocking out Russia from the JP Morgan index that paved the way for India’s inclusion. If Indian bonds are included in the global bond indices, the country will not only gain prestige in the eyes of the financial world but also, more importantly, a possible $23 billion in funds, which would be a great asset to a capital-hungry country focussed on quick development. Once the inclusion is complete, the flow of funds will depend on India’s credibility among the investor community worldwide. The Bloomberg document also stated that BISL will consider the feedback and decide unilaterally whether, and how, to respond to any feedback, comment or recommendation that might be the outcome of the review process. Earlier many investors expected a possible announcement on Indian securities being included in a Bloomberg index by March 2024. Incidentally, the Fully Accessible Route bonds were developed by the RBI in 2020 and they allow foreign investment without any ceiling. The 23 bonds that will be coopted in the JP Morgan index are all Fully Accessible Route bonds.