Bloomberg to include India's FAR bonds in EM local currency govt index

The index would encompass 34 Indian securities and represent 7.26% of a $6.18 trillion index on a market value-weighted basis

Bloomberg, the global financial information and technology company, has made a significant announcement regarding the inclusion of India's Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices. This decision will be phased in over a ten-month period, commencing from January 31, 2025.

Indian FAR bonds will initially be incorporated into the Bloomberg EM Local Currency Government indices with a weight equivalent to 10 per cent of their full market value as of January 31, 2025. Over the following ten months, the weight of FAR bonds will progressively increase in increments of 10 per cent of their full market value each month. They will be weighted at their full market value in the indices in October 2025.

The indices encompassed in this inclusion are the "Bloomberg EM Local Currency Government Index", the "Bloomberg EM Local Currency Government Index 10% Country Capped Index", and all related sub-indices.

Upon complete integration into the Bloomberg Emerging Market 10% Country Capped Index, India is poised to join China and South Korea as markets reach the 10 per cent cap. In the market-cap-weighted version of the index, India is anticipated to rank as the third-largest country after China and South Korea. Utilising data as of January 31, 2024, the index would encompass 34 Indian securities and represent 7.26 per cent of a $6.18 trillion index on a market value-weighted basis.

Michael R Bloomberg, founder of Bloomberg LP, stated, "This is an important marker in the development of India's financial markets and a reflection of India's growing importance to the global economy. India's continued emergence as a global financial centre promises to be one of the most significant economic developments of this decade, and Bloomberg is committed to bolstering it by connecting more investors to India."

Nick Gendron, global head of fixed income index product at Bloomberg Index Services Limited (BISL), highlighted the significance of this move, adding, "The Indian economy is on a steady growth trajectory, and inclusion of Indian FAR Bonds in our Emerging Market Local Currency Government Index marks a key milestone amidst the measures India has taken to open its bond markets. Bloomberg Indices is committed to serving the global investment community, and this development will increase access to and participation in Indian markets."

The decision to include India FAR Bonds in the Bloomberg EM Local Currency Government Index followed extensive consultation with market participants and stakeholders. Additionally, Bloomberg Indices will introduce an ex-India version of the EM Local Currency Government Index and can create other standard and custom versions of the index, reaffirming its commitment to providing independent and transparent indexing solutions to customers worldwide.