Bloomberg to add Indian bonds to EM indexes in Jan.

Syllabus: GS-III, Subject: Economy, Topic: Trade and External sector, Issue: Emerging Markets Index

Context: Bloomberg said it will add a set of Indian government bonds to its emerging market index.

  • JP Morgan previously announced it will include India’s fully accessible route (FAR) securities in its GBI-EM Global index.

Benefits of inclusion for India:

  • Increased foreign investments.
  • Reduction in borrowing costs.
  • Potential to increase the liquidity of Indian government bonds in the local currency.
  • Provides a benchmark for investors to compare the performance of Indian government bonds with other emerging markets.
Fully Accessible Route is a separate channel allowing non-residents to invest in specified Indian government securities without investment ceilings.

Emerging Market Local Currency Government Index:

  • A specific type of stock market index that tracks the performance of government bonds issued by emerging economies.
  • Denominated in their local currencies.
  • Example: JPMorgan GBI-EM Global Diversified Index
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