After JP Morgan and FTSE Russell, it is the turn of Bloomberg to weigh up the entry of Indian government bonds in its global indices.
While JP Morgan permitted entry, FTSE Russell kept India on its watchlist.
Bloomberg Index Services (BISL) said it will hold advisory meetings for its fixed income index in Asia, Europe and the US, which will deliberate on the entry of Indian G-Secs.
BISL will hold the Bloomberg Fixed Income Index Advisory Councils in October and November.
The annual exercise sees BISL obtainingfeedback from participants on various matters related to its fixed-income indices.
On India, BISL said it will discuss the "potential eligibility of India Treasury Fully Accessible Route (FAR) bond market for the Global Aggregate and the Emerging Market Local Currency Indices”.
The FAR list was introduced by the RBI in 2020, covering 23 securities where there are no limits on holdings by foreign investors.
BISL’s announcement comes after JP Morgan said it would include Indian government bonds in its emerging market index.
JP Morgan’s decision could lead to inflows of at least $24 billion into India.
JP Morgan had said that India will also feature in the GBI-EM Global Index suite starting June 28, 2024.
It had identified 23 securities from FAR with a combined notional value of $330 billion that are eligible for inclusion.
A recent note from Edelweiss Asset Management Company said it expects increased demand and favourable market conditions for the Indian government bonds over the medium term.
It pointed out JP Morgan’s decision would lead to more flows to these bonds, largely due to their lower correlation with other emerging markets and global bonds.
Another attractive factor will be their relatively higher yields.
It also pointed out certain risks that include a sustained increase in US Treasury yields and elevated crude oil prices. This has the potential to affect market flows.
Denied entry
FTSE Russell continued to keep India on the watchlist for inclusion in its emerging market government bond index.
After its annual country classification review, the index provider said in a statement that India will remain on its watchlist.
