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Bloomberg Offers to Help India Access Global Bond Indexes

Move will help India attract more foreign inflows.

Bloomberg Offers to Help India Access Global Bond Indexes
People stand in line at the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

(Bloomberg) -- Bloomberg LP will work with Indian authorities to help the nation gain access to global bond indexes, a move that will lure more overseas flows into Asia’s third-largest economy.

“Bloomberg will help India navigate the process for gaining inclusion in global market benchmark indexes, so international investors can access India’s bond market,” Founder Michael Bloomberg, said in New York at a business forum. Indian Prime Minister Narendra Modi is the key note speaker at the event.

The move will “help Indian businesses raise funds, invest and grow and it will help India’s government raise funding for infrastructure and public service,” Bloomberg said.

Overseas investors have long sought greater access to Indian bonds, drawn to an economy that’s growing at more than 6% a year and yields which are among Asia’s highest. Foreigners though have restricted access to the nation’s debt, limiting their appeal to funds tracking benchmark indexes such as Bloomberg Barclays Global Aggregate Index.

“The inclusion of Indian bonds into the Barclays global bond index would be a tremendous boost to the country,” said Anders Faergemann, a senior portfolio manager at Pinebridge Investments in London. There would be strong demand for India’s bonds from both active and passive investors “as the government has proved reform minded and the central bank has built a reputation for being independent.”

Getting added into global indexes could bring in billions of dollars, which would help India bridge a long-running current-account deficit. Analysts estimate that China’s inclusion in the Bloomberg Barclays Global Aggregate Index this year may spur more than $100 billion of inflows.

Bloomberg Offers to Help India Access Global Bond Indexes

Bloomberg will also “support the development of international financial services sector in Gujarat,” Bloomberg said. The company “will host a series of round tables in India, Asia and beyond with investors from across the world,” he added.

India’s central bank and government though have been wary about the volatility that greater access to global funds would bring to its markets. While the Reserve Bank of India agreed to raise the cap on foreign ownership of government bonds to 6% from 4% by 2020, that still pales in comparison to Indonesia where offshore funds own more than a third of sovereign debt.

“It is a golden opportunity for the business world to form partnerships with India to accompany it on its journey,” Modi said at the forum. If you want to invest in a market where there’s scale, “come to India,” he said.

Michael R. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News and Bloomberg Barclays Indices.

To contact the reporter on this story: Kartik Goyal in Mumbai at kgoyal@bloomberg.net

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Arijit Ghosh, Jeanette Rodrigues

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