JPMorgan to launch frontier market local currency debt index by month end, source says

JPMorgan is set to launch its frontier market local currency government bond index by the end of September, according to a source familiar with the plans. The index, called GBI-EM Edge, will cover bonds from 26 countries with a total debt of nearly $330 billion. This new benchmark follows the bank's previous hard-currency NEXGEM frontier index, which was launched 15 years ago.

The source revealed that African countries, which make up almost 45 percent of the index, will have the largest weightings, followed by Frontier Asia, which includes Vietnam, Kazakhstan, Pakistan, and Bangladesh. The bonds included in the index must have at least 2.5 years to maturity and a minimum weightage of $250 million equivalent.

The index's nominal yields average almost 10.4 percent, significantly higher than the bank's EM local currency index. JPMorgan's new index will track almost $330 billion of tradable local-currency emerging market debt, which has tripled over the last decade to around $1 trillion.