Bloomberg To Add India’s FAR Bonds In EM Local Currency Govt Index From Jan 31, 2025

Over the period of ten months, the weight of the FAR bond will gradually increase in multiples of 10 per cent of their overall market value on a monthly basis

Bloomberg announced the inclusion of India’s Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices. The inclusion of the bonds will start from January 31, 2025, and the decision will be completed in over a ten-month period. 

The bonds will first be included in the indices with a weight equivalent to 10 per cent of their complete market value. Over the period of ten months, the weight of the FAR bond will gradually increase in multiples of 10 per cent of their overall market value on a monthly basis. The bonds will be weighted at their complete market value in the indices October 2025 onwards, reported Business Standard.

The decision assumes great importance for India and the indices included in this decision are the Bloomberg EM Local Currency Government Index, the Bloomberg EM Local Currency Government Index 10% Country Capped Index, and all related indices. The FAR bonds are ones that foreign investors can purchase without any limits.

Elaborating on the inclusion, Michael R Bloomberg, Founder, Bloomberg LP, said, “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.”

India will join China and South Korea as markets reach the 10 per cent once the bonds are completely integrated into the Bloomberg Emerging Market 10 Per Cent Country Capped Index. 

India is expected to come as the third-largest country after China and South Korea in the market cap-weighted version of the index, the report noted. As of January 31, 2024, the index will cover 34 Indian securities and represent 7.26 per cent of a $6.18 trillion index on a market value-weighted basis. 

Nick Gendron, global head of fixed income index product, Bloomberg Index Services Limited (BISL), said that this move was very important and the inclusion of the Indian FAR Bonds in the Emerging Market Local Currency Government Index reflects the measures taken by India 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,” Gendron stated.