JPMorgan to launch long-awaited 'frontier' local currency debt index
JPMorgan has been working on the new index for years
JPMorgan is set to introduce its long-awaited “frontier” local-currency government bond index by the end of September. This new benchmark will provide investors with a benchmark for nearly US$330 billion of debt across 26 frontier economies. The index, known as the “GBI-EM Edge,” will cover bonds from countries like Egypt, Vietnam, Morocco, Kazakhstan, Bangladesh, Pakistan, Nigeria, and Sri Lanka, which have experienced strong market rallies in recent years.
These nations, which account for a fifth of the world’s population, are expected to contribute significantly to global economic growth in the coming decades. JPMorgan has been working on the index for years, responding to the growing demand for high-yielding debt. The index will only include bonds with a minimum value of US$250 million and a maturity of at least 2.5 years, with no single country holding more than 8% of the index's weight.
African countries will make up nearly half of the index, while “Frontier Asia” will account for nearly a third. Analysts see the index as a potential boon for frontier market investing, as it will help diversify portfolios and promote the growth of local-currency markets.
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