Goldman Sachs sees India bonds getting added to JP Morgan index in 2023





Indian government may be added to a global index next year, triggering passive inflows of about $30 billion that will help the country to finance its current account and fiscal deficits, according to Group Inc.


The nation’s sovereign may be added to JPMorgan’s GBI-EM Global Diversified bond index with an initial 10% weightage, analysts Danny Suwanapruti and Santanu Sengupta wrote in a note to clients. India’s $1 trillion sovereign bond market is one of the biggest among emerging not to be part of any global index.


Goldman’s optimism comes even as the index inclusion has largely gone on the back burner after New Delhi desisted from making any tax changes for foreigners that would have helped Indian settlement on international clearing platforms like Euroclear. The analysts wrote that both Chinese and Indonesian government bonds though not Euroclearable are part of the JPMorgan index.

Also Read: New Sebi rules may pull the rug out from India’s bid to boost bond market


“Adding India, which is a large, deep and high-yielding market, would help to diversify as well as boost the average yield of the overall index,” the analysts wrote. “Such a move would be beneficial to various stakeholders, including EM and the Indian government.”


Account openings for foreigners are still cumbersome in India but can be addressed by a longer lead time for inclusion, according to the note. The country has also made some progress on operational issues, like posting margin requirements and extended settlement timings, the analysts wrote.

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