09 Jun 2021

The leading global index provider FTSE Russell has announced that they will be launching a new global government bond index that will focus exclusively on frontier emerging markets. Egypt is one of 13 countries eligible for inclusion at the launch of the index.

The index series will be called the FTSE Frontier Emerging Markets Government Bond Index Series. The series will include a market value weighted index and another index with a 10% country cap. The indices will track fixed-rate, local currency government bonds. The establishment of these frontier emerging markets indices comes as a response to rising interest in this expanding area of global debt markets. This interest is partly driven by ample liquidity and low interest rates, which is driving capital flows towards higher yielding products in previously untapped markets.

Egypt’s inclusion in these indices will provide more transparency for their bonds, thus strengthening the country’s capital markets through open access to metrics such as pricing and performance. It will also pave the way for global financial institutions to begin building financial products based on these objective indices.

The Minister of Finance said in a statement that he expects additional foreign currency inflows of about USD4bn based on Egypt’s inclusion in the index series. This would represent even more than the expected USD1.4-2.2bn should Egypt be re-included in the JPMorgan EM Bond Index later this year.

(Source: FTSE Russel Official Press Release (English), Reuters (English), U.S. News & World Report (English), Enterprise (English))