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Wednesday, 9 June 2021

Good news for bond inflows as Egypt added to FTSE frontier bond index

Egypt is now part of the FTSE Russell’s new bond index, which tracks local currency bonds issued in frontier markets, the index provider said in a statement yesterday. The Frontier Emerging Markets Government Bond Index Series contains a cap-weighted index and a 10% country-capped index and tracks the performance of bonds issued by 13 frontier and emerging market countries with a current value of USD 414.8 bn.

What weighting do EGP bonds have on the index? Out of the 588 bonds on the index, 80 local Egyptian bonds are featured, giving them a weighting of c. 13.6%. As of the end of March they carried an average yield of 14.86%. Check out the factsheet (pdf) for more information.

Who else is in the mix? Bangladesh, Costa Rica, Dominican Republic, Ghana, Kenya, Morocco, Nigeria, Pakistan, Serbia, Sri Lanka, Ukraine and Vietnam are also included. Inclusion in the index will be reviewed semi-annually in March and September.

Hopefully we’ll be saying something similar about the JPM index in a few months’ time: JPMorgan is expected to decide whether to reinclude Egypt on its EM government bond index later this year, potentially bringing USD 1.4-2.2 bn in inflows into local-currency bonds.

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