JPMorgan will launch GBI-EM Edge, a local-currency government bond index for frontier markets, by the end of September. According to investor materials reviewed by Reuters, the new index will cover the government bonds of 26 countries and become a new benchmark for a bond market worth about 330 billion dollars in total. It is JPMorgan's first new index since the firm introduced NEXGEM, a hard-currency frontier market index, about 20 years ago. Countries expected to carry larger weightings include Egypt, Vietnam, Morocco, Kazakhstan, Bangladesh, Pakistan, Nigeria and Sri Lanka. Inclusion is limited to bonds with an outstanding issue size equivalent to at least 250 million dollars, with a remaining maturity of 2.5 years or more, and each country's weighting is capped at 8 percent. By region, African countries are expected to account for about 45 percent of the index, with frontier Asia at about one third. The nominal yield is about 10.4 percent, roughly 440 basis points above the main emerging-market local-currency bond indexes.
JPMorgan Chase & CoJPMorgan launches its first new index in ~20 years, GBI-EM Edge, expanding its benchmark franchise into a $330B frontier local-currency bond market.
