Indian investors face a crucial week with announcements due to a major index review for the country’s bonds and the government’s borrowing plan for the next six months, as reported. bloomberg. FTSE Russell will announce its annual review for equity and fixed-income markets on Thursday, with Indian debt already on a watch list for possible upgrades.
Although the government is yet to say when it will announce its next lending programme, sources said. bloomberg The officials of the central bank and the finance ministry will decide the plan on Monday.
The FTSE said earlier this year that global index users have shown interest in Indian sovereign securities issued through the Fully Accessible Route (FAR). FTSE said it will also launch a version of its FTSE Government of India Bond Index that tracks these securities in the coming weeks.
The inclusion of India’s sovereign bonds in global bond indices—JP Morgan’s influential Government Bond Index-Emerging Markets (GBI-EM) and Global Aggregate Index—could pave the way for attracting $170-$250 billion bond inflows over the next decade. can.
Earlier this month, global financial services major Morgan Stanley said it expects India to be included in global bond indices by early 2022. According to Morgan Stanley, the index inclusion will attract $170 billion to $250 billion in bond inflows over the next decade while Goldman Sachs estimates that there would be passive inflows of around $35-40 billion if India were included in both the indices. Is.
Foreign inflows should lower borrowing costs, which helps with debt stability as it is important for India to have an investment grade rating.
Indian bonds are already headed for their biggest monthly gains since April, and could get a further boost if the government decides to cut borrowing for the second half of the fiscal year as revenues improve. Is.
Earlier this month a finance ministry official said the country has completed most of the work required to be part of the global benchmark, after which a rise in the index looks more imminent.
Indian bonds are also being reviewed for inclusion by JPMorgan Chase & Co., which usually assesses its index this month, while Bloomberg Index Services Ltd said last week that India will be included in the Bloomberg Global Aggregate Index. There is no estimated time limit to join.
Since 2019, India has been working towards joining global bond indices as rising government borrowing and a desire to push investment rates higher necessitated the opening up of the domestic bond market to a wider investor base.
(with inputs from Bloomberg)
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