Bangladesh Bonds Join Global Index, Attracting International Investors

JPMorgan is launching a new index called GBI-EM Edge by the end of September, which will track local-currency government bonds from 26 frontier-market countries. The index will cover nearly $330 billion worth of debt, with Bangladesh being one of the countries included. This means that Bangladeshi government bonds can account for up to 8% of the index.

The inclusion of Bangladesh in this index is significant because it could lead to greater visibility among international investors and potentially attract more foreign investment into the country's bond market. However, investors will still consider various factors such as inflation, interest rates, exchange rate, economic outlook, market liquidity, and policy risks before investing.

The new index has a nominal yield of almost 10.4%, which is around 440 basis points higher than JPMorgan's mainstream emerging-market local-currency bond index. This could be attractive to investors seeking higher yields, but it also reflects the higher risks associated with frontier markets.