Global Economy
JPMorgan to Launch New Frontier‑Market Bond Index in Local Currencies, Morocco Included
JPMorgan is close to unveiling a new index that tracks sovereign bond issuance from frontier markets, but unlike its existing NEXGEM index, it will be denominated in the issuers’ own currencies. The basket is expected to cover 20‑25 economies, with Egypt, Vietnam, Kenya, Morocco, Kazakhstan, Pakistan, Nigeria, Sri Lanka and Bangladesh slated to receive the highest weights. A country‑cap of 8‑10% and a minimum issue size of $250 million aim to prevent concentration and exclude smaller issuers such as Zambia. The move reflects renewed investor appetite for higher‑yield, diversified debt amid a weak dollar and recent strong performance of frontier markets.
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JPMorgan’s new frontier‑market bond index
JPMorgan is finalising a new benchmark that will focus on sovereign debt issued by frontier economies and priced in the local currency of each issuer. The index is slated for an official launch by mid‑2026, according to several asset managers briefed by Reuters.
Scope and composition
- Target universe: 20‑25 frontier‑market countries.
- Countries likely to receive the highest allocations: Egypt, Vietnam, Kenya, Morocco, Kazakhstan, Pakistan, Nigeria, Sri Lanka and Bangladesh.
- Maximum weight per country: 8 %‑10 % to avoid excessive concentration.
- Eligibility: each bond must have an outstanding amount of at least US$250 million, which could disqualify smaller issuers such as Zambia.
Why now?
The initiative comes as investors search for yield in a low‑interest‑rate environment, with the U.S. dollar weakening and several frontier markets delivering solid returns. By denominating the index in local currencies, JPMorgan hopes to give investors direct exposure to currency risk and potentially higher returns, while also broadening the investment universe beyond the existing NEXGEM index, which is limited to hard‑currency issuances launched fifteen years ago.
Official stance
JPMorgan declined to comment on the project at this stage.