India’s entry Into JP Morgan Bond Index may assure cheaper funding

(Bloomberg) — Fund raising by Indian companies will become cheaper after inclusion of country’s sovereign bonds in JPMorgan emerging markets index, according to a Bloomberg report.

“With the foreign investor share in India government bonds getting larger, the domestic investors will be able to focus on the broader debt issuances from Indian companies, creating an opportunity for further lowering the cost for corporate fund raising,” Bloomberg quoted Kaustubh Kulkarni , Wall Street bank’s senior country officer for India and vice-chair for Asia Pacific.

JP Morgan expects $20 billion to $25 billion of global flows over the next 10 months, raising foreign ownership to 4.4% from the present 2.5% . The inclusion has the potential to open up a $1.3 trillion market to a broader range of investors. This would push down the cost of borrowing.

(Bloomberg) — Fund raising by Indian companies will become cheaper after inclusion of country’s sovereign bonds in JPMorgan emerging markets index, according to a Bloomberg report.

“With the foreign investor share in India government bonds getting larger, the domestic investors will be able to focus on the broader debt issuances from Indian companies, creating an opportunity for further lowering the cost for corporate fund raising,” Bloomberg quoted Kaustubh Kulkarni , Wall Street bank’s senior country officer for India and vice-chair for Asia Pacific.

JP Morgan expects $20 billion to $25 billion of global flows over the next 10 months, raising foreign ownership to 4.4% from the present 2.5% . The inclusion has the potential to open up a $1.3 trillion market to a broader range of investors. This would push down the cost of borrowing.

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“The index inclusion would bring in new investments from international investors both active and passive, boosting overall liquidity in the system,” Bloomberg quoted Kulkarni , adding that similar past experience indicates a lowering of risk premiums and borrowing costs.

Kulkarni said the inclusion shows India’s importance and highlights one of the largest markets among the emerging markets . Index inclusion “will result in further integration and participation of global investors with Indian credit markets via government bonds,” he said.

The US bank will continue to engage the central bank and its own clients to encourage more investments.

“The pool of active investment capital from foreign portfolio investors could also spill over to other domestic bonds over time once they become more familiar,” he was quoted.