After JP Morgan, Bloomberg proposes to include Indian bonds in the EM index; seeks feedback

For the inclusion of the India Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Index, Bloomberg Index Services Limited (BISL) has launched a consultation paper seeking feedback on the proposed inclusion.
 
As per the proposal, the inclusion has to be implemented over a five-month period beginning in September 2024. Consequently, "the Indian FAR bonds will be included in the EM Local Currency indices with an initial weight of 20 per cent of their full market value in September 2024. The weight of FAR bonds will be increased in increments of 20 per cent of their full market value every month over the five-month period ending in January 2025, at which point they will be weighted at their full market value (100 per cent) in the indices," read the circular by the index provider.
 
The circular further stated that as and when the FAR bonds are completely phased into the Bloomberg Emerging Market 10% Country Capped Index (Ticker: EML1TRUU), India FAR bonds will be fully capped at 10 per cent weight within the index. Moreover, on the inclusion, India's currency rupee will bag the top third largest currency component, slot after Chinese Renminbi and the South Korean Won, within the Bloomberg Emerging Market Local Currency Index.

Further, considering the data as of November 30, 2023, the index would include 32 Indian securities and represent 6.99 per cent of a $5.96 trillion index.
 
The move is expected to trigger incremental foreign inflows into the bond market.
 
Earlier, JP Morgan proposed to include India bonds in its Global Bond Index: Emerging Markets, beginning June this year.
 
"While this change is targeted for implementation effective September 2024, further information on the implementation date will be provided after the end of the consultation period. Please be advised that all feedback received during the consultation will be reviewed internally by BISL before a final decision is made," added the statement.