JPMorgan Unveils Frontier Market Benchmark, Tracking Nearly $330 Billion in Debt

JPMorgan is set to launch its long-awaited 'frontier' market local-currency government bond index, the GBI-EM Edge, by the end of September. This new benchmark will cover bonds from 26 countries and include nearly $330 billion of debt across some of the world's fastest-growing economies.

The index will track bonds with a minimum size of $250 million equivalent or above and at least 2.5 years left to maturity. It will have a maximum weighting cap of 8% for any country, with African countries accounting for almost 45% of the index.

Thomas Christiansen, head of EM fixed income at fund manager UBP in London, said that the index's launch reflected the growth in frontier market investing, stating 'I don't think this index would have been possible 10 years ago.' The new benchmark is expected to help expand local-currency markets and reduce debt crises caused by currency crashes.

The World Bank says frontier economies are home to a fifth of the world's population but account for just 3.1% of global capital flows and less than 5% of global GDP. They are, however, expected to play an increasingly important role in global economic growth over the next 25 years.